When people think about putting in place an estate plan, they often limit their thinking to wills, trusts, probate administration and passing along property. However, these are just the money and asset elements of planning. One of the key areas of control planning is putting together a plan to address what happens if you are incapacitated and cannot manage your medical and financial decisions. Failing to plan for incapacity could result in you and your family going through costly and public court proceedings, where a judge determines who is in control of assets. Consider the following tools:
Durable General Power of Attorney
A durable general power of attorney is a workhorse in any form of incapacity planning. It ensures the person you name has authority to act on your financial affairs in the case of incapacity. While this tool is commonly used for an older adult, there are many reasons why a person of any age might need it. Certain elements of this tool vary from state to state, but it is a powerful tool that can help manage finances in case of travel or incapacity.
Health Care Power of Attorney
In creating the health care power of attorney, you appoint someone to make any and all health care decisions for you in case of incapacity. Most people mistakenly assume their spouse or a family member can legally step in to make these decisions. However, a power of attorney for health care or a court order are usually required. Having a health care power of attorney in place designates your chosen decisionmaker in advance, avoiding family disagreements and delays at a time when quick and crucial action may be needed. Knowing the person in charge of your medical decisions during incapacity can give them and their loved ones peace of mind.
Advanced Health Care Directive
This document is the one most people are often most resistant to discuss. A living will, or advance care directive, allows you to express your wishes regarding end-of-life medical treatment. You can specify exactly what you want doctors to do in an effort to save or prolong your life. No one likes to think about these concerns, but putting off the decision only leaves the burden on loved ones at a time when they are under duress. Specifying exactly what you do and don’t want done makes it easier for loved ones, taking away the responsibility of those decisions.
Revocable Trust
A revocable trust is a fantastic strategy for incapacity planning. It allows you to think through many of the financial instructions on how you want your financial affairs managed if ever incapacitated. If you create a revocable trust and name a “successor trustee” in the event of incapacity, then you avoid having a court appoint someone to manage your assets. This will reduce costs, keeps the contents of the trust private and reduce stress on family or loved ones.
Blended Families
Failing to do incapacity planning in a blended family can result in a huge court fight. We encourage any blended family clients to make their wishes known now to reduce the risk of fights and hurt feelings later.