Planning for Incapacity

For many people, estate planning is focused on distributing assets after death. But you also need to plan for incapacity due to injury, illness, or aging. Incapacity means you are unable to make decisions and cannot manage financial, personal, and health care matters. In this article, we will go over what you should know when it comes to planning for incapacity.

Value of a Power of Attorney

A power of attorney gives you the ability to designate a trusted individual to handle your affairs if you are incapacitated. These are available for both medical and financial decisions. With a financial POA you grant an agent the authority to make financial decisions on your behalf. This includes paying bills and managing bank and investment accounts. A medical POA allows you to leave an agent in charge to make medical decisions for you if you are incapable of expressing your wishes. You can set these powers of attorney up to be effective immediately or only upon your incapacity.

Utilizing a Living Will

A living will, or end of life care plan, is an advance healthcare directive. It allows you to outline your wishes regarding life sustaining treatment so they are in writing for when you can no longer communicate them. It provides guidance for your doctors and family members to ensure your wishes are followed and prevent disagreements. This document does not appoint agents; you will still need the power of attorney to do that.

Protect Yourself with HIPAA

HIPAA stands for the Health Insurance Portability and Accountability Act. It prevents your healthcare providers from sharing your information without your consent. But your chosen agents will need access to this information. A HIPAA waiver gives permission to specific individuals to communicate with your healthcare providers.

Control Assets with a Revocable Living Trust

A revocable living trust mainly comes into play upon your death, but it can also prove to be a way to manage your affairs upon incapacity. By naming assets into your trust and having a successor trustee to manage them you are planning in advance. This allows your successor trustee to step in and help you upon incapacity without a court order. This set up compliments the financial power of attorney. Due to this fact your successor trustees and financial agents should match.

Take Action Now for Planning for Incapacity

If you do not have documents in place, your loved ones will have to go through the legal process to appoint a guardian and/or conservator. A guardian is someone appointed by court to make personal and medical decisions on your behalf. A conservator would be responsible for your financial affairs.

By addressing your incapacity in advance, you can help your loved ones and make sure your preferences are honored. The more proactive you are with your planning the better prepared you will be.

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