By Jenny Ling, Esq.
Most people think of estate planning as only preparing for when you die – who gets what and when. While this is a fundamental part of estate planning, but it is not the only part. What would happen to your family and assets if you were incapacitated, whether from an accident or illness?
Incapacity means the “physical or mental inability to […] manage one's affairs.” Incapacity can be temporary - you are expected to recover eventually; or it can be the start of a long event that ends in your death. Incapacity can last for many years and if you do not make a plan, your family may need to go to court to help make financial and health care decisions for you.
Our goal in helping you make a plan is to keep your family out of court and out of conflict, no matter what happens to you. If you only plan for your death, you are leaving a big hole in your plan.
What should my plan look like?
A plan for incapacity only goes into effect when you are unable to make your own decisions. If you recover and regain the ability to make your wishes known, the legal power you have grated others is revoked. The same thing happens if you die – your death renders those powers null and void.
You should ask yourself, “If I am ever incapacitated and can’t make my own decisions, who do I want making decisions on my behalf?” You need to select someone to make healthcare, financial, and legal decisions on your behalf. You do not have to pick the same person for each of these! You may wish to have your adult child make healthcare decisions while leaving financial decisions to a sibling or trusted friend. A Durable Power of Attorney and a Health Care Power of Attorney give authority to those you trust to make these decisions for you in the event of incapacity.
A Health Care Directive, also known as a Living Will, is an essential part of any plan for incapacity. A Health Care Directive provides specific directives about the course of treatment healthcare providers and caregivers are to follow when you are diagnosed as terminally ill or permanently unconscious. A Health Care Directive is used only if you have become unable to give informed consent or refusal due to incapacity.
A Revocable Living Trust can be another effective tool when planning for incapacity. It is a planning document that immediately transfers control of all of the assets you have placed in the trust to your selected Successor Trustee in the event of your incapacity. The Trust includes legally binding instructions for how your finances should be managed by the Successor Trustee. Your Successor Trustee has a fiduciary duty to carry out your wishes. This document can be especially important if you provide financial support for others – like for parents of small children. It gives immediate access to your assets for the care of your family if you are not able to provide that care.
Let’s make a plan!
A comprehensive estate plan helps you make a plan not just for your death but also for potential incapacity. If you have not made a plan yet, give us a call for your complimentary Estate Analysis Planning Session (valued at $750 per session!). We will discuss your goals and objectives and start crafting a plan that works for you and your loved ones.