Planning for the Unexpected: The Importance of Estate Planning for Incapacity

by Jenny Ling, Esq.

Estate planning is an essential aspect of planning for the future that many people tend to overlook. While most people consider estate planning to just be a plan for how assets are distributed upon death, estate planning is also creating a plan for what who makes decisions for you when you become incapacitated.  A comprehensive estate plan also plans for the possibility of your incapacity.

Incapacity can occur suddenly and unexpectedly, and it can happen to anyone at any age. It can be the result of an accident, sudden illness such as a heart attack, or cognitive decline. When someone becomes incapacitated, they are unable to manage their affairs and make important decisions for themselves. In these situations, having a comprehensive estate plan in place can be invaluable.

Here are some of the reasons why it's essential to use estate planning to have a plan in place in case of incapacity:

Avoiding court-appointed guardianship and conservatorship

If you become incapacitated and don't have a comprehensive estate plan in place, a court will appoint a guardian to manage your affairs. This process can be time-consuming, expensive, and stressful for your loved ones and may result in someone you wouldn’t choose making decisions for you. By creating a durable power of attorney and healthcare proxy, you can appoint people you trust to make decisions on your behalf, and avoid court-appointed guardianship and conservatorship. These proceedings can take several weeks.

Ensuring your medical wishes are followed

If you become incapacitated and don't have a comprehensive estate plan in place, your loved ones may not know your wishes regarding medical treatment, and end-of-life care. A Health Care Power of Attorney enables you to select persons you trust to make medical decisions on your behalf when you are unable. 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. 

Providing access to finances

If you become incapacitated and don't have a comprehensive estate plan in place, your loved ones would not have access to your finances to help pay for your expenses. By creating a living trust, or a general durable power of attorney however, you can include provisions that appoint someone of your choosing—not the court’s—to manage your financial affairs in the event of incapacity.

A Revocable Living Trust 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.

Reducing family conflict

Incapacity can be a stressful and emotional time for your loved ones. By creating a comprehensive estate plan, you can ensure that your family knows what your medical wishes are and has access to the funds to help you, while reducing the likelihood of family conflict and ensure that everyone is on the same page.

Let’s make a plan!

Estate planning is essential for planning for the possibility of incapacity. By creating legal documents such as durable power of attorney, healthcare proxy, living will, and for some a trust, you can ensure that your wishes are followed, your assets are protected, and reduce the likelihood of family conflict. Don't wait until it's too late to create an estate plan – start planning today.

If you have not made a plan yet, Contact Us to schedule your complimentary 15-minute phone call to discuss how we can make a plan not just for your death but also for potential incapacity.

Jenny Ling is a partner at the Law Offices of Jenny Ling, PLLC.  She focuses her practices on estate planning, business succession planning, business and bankruptcy.