WHAT IS INCAPACITY PLANNING?

If you’re like most people, you may not be familiar with the concept of incapacity planning. Incapacity planning is simply preparing for the time that you may be unable or unwilling to make your own day to day decisions. Estate planning encompasses incapacity planning.

When would I be incapacitated?

Incapacity refers to the time when you would be unable to manage your finances, medical decisions, and day to day affairs.

Who determines that I am incapacitated?

A court can make the competency decision during a guardianship proceeding. But, guardianships are expensive, time consuming, public, and stressful. This process, called “guardianship” or “conservatorship,” is required if you do not have appropriate incapacity planning in place.

It is preferable to have a private determination such as by a “disability panel.” You give instruction for the creation and implementation of such panel in your revocable living trust. The panel typically includes trusted family members and medical professionals.

So, I need a revocable living trust to prepare for incapacity?

In almost all cases, it would be beneficial to have disability provisions in a revocable living trust, financial power of attorney, and health care proxy. This is the three prong approach to incapacity planning.

In the revocable living trust, you provide for the determination of your disability, name disability trustees, and give instruction for your care and the management of your assets during any period of disability.

I need a power of attorney and health care proxy?

You need a financial power of attorney so your named agent can manage your assets and financial affairs and take care of your day to day business. The agent under a financial power of attorney should care about you, be highly organized, a good record keeper, and a good communicator.

You need a health care proxy so that your named agent can make health care decisions for you if you are not able to make those decisions yourself. The agent under a heath care proxy should care about you and have the ability to be assertive with medical professionals, especially doctors.

If you have any questions about incapacity planning, consult with a qualified estate planning attorney.