Growing older and the inevitability of death are unpleasant topics for most people. Often equally unpleasant is the thought of being alive but being unable to make important decisions for yourself. Part of a comprehensive and effective estate planning strategy includes ensuring that you have planned for the possibility of future incapacity. Incapacity typically refers to the inability to make important medical and financial decisions, but proper planning for the possibility of such an occurrence can help make sure that should such circumstances arise, your designee will be adequately prepared to handle them. Failing to plan for incapacity can result in serious financial consequences and may inhibit your ability to distribute your assets as you see fit.
Perhaps the most important part of ensuring that you have adequately planned for the possibility of incapacity is working with an experienced estate planning attorney to make sure all of your estate planning documents accurately reflect your wishes for them. An estate planning attorney can review your estate plan for accuracy as well as for compliance with the law, and can ensure that any steps you have taken to plan for incapacity will fulfill your goals. The following suggestions can help you plan for the possibility of incapacity and avoid the pitfalls that come from being unprepared.
Power of Attorney
A power of attorney can be designed to meet your needs by designating an individual you have chosen to make certain important financial and asset-related decisions for you. You can design this tool as you see fit, restricting some abilities or allowing for more liberal decision-making authority. This is an important step in preventing your finances from falling into disarray if you become incapacitated and cannot manage such responsibilities. Allowing an individual to attend to your finances enables them to ensure financial obligations are met and you do not risk losing important assets, such as real property.
Revocable Trusts
Establishing a revocable trust is often a safe way to ensure that your assets are protected. If you assign your assets to a trust you have created, then you will still retain control over those assets even if they are titled in the trust’s name. You will only relinquish control if you become incapacitated, at which point your designee will be able to manage these assets according to the rules of the trust. These trusts can also be designed to help protect your assets from creditors in the event of incapacitation.
Health Care Proxy
A health care proxy will enable you to nominate an individual to make important medical decisions for you if you cannot. Like a power of attorney, you can design this tool to grant as much authority to the designee as you would like. These documents enable you to memorialize your decisions related to your health care and ensure that health care providers follow your wishes. While having a conversation about your wishes is important, this document will allow an individual to legally carry out your wishes.
HIPAA Authorizations
While a health care proxy is an important document when it comes to the type of medical care you want to have in the event that you are unable to make such decisions yourself, you will need to ensure that it is accompanied by HIPAA authorizations for the individual you have designated to make these medical decisions. Otherwise, the individual may not be allowed to have access to important medical records and treatment information that will allow them to make informed decisions about your medical care on your behalf. Even spouses or children may be denied access to these types of medical records, so simply designated a close family member as your health care proxy may not be enough to allow them to make the most informed decisions about your care.