When you think about it, planning your estate is not about dying. It’s about managing and protecting your assets, and who gets to control them, while you are living.
If you become incapacitated, having an incapacity plan in with your overall estate plan ensures that your best interests are clear. It also ensures your family is taken care of.
Why An Incapacity Plan?
If you become seriously ill or develop conditions affecting your memory, you may not be able to handle your finances without assistance. If you do not have a power of attorney, there could be a delay in handling essential matters such as paying a mortgage or filing taxes. Eventually, someone else will be appointed to manage your affairs, hopefully before you have done permanent damage to your estate.
To get ahead of these potentially catastrophic situations you can designate someone today to manage your affairs, care for you, seek treatment on your behalf, and generally make sure everything is handled how you would (or would have) handle them.
Build Your Plan
When you begin your estate planning, remember the following are essential documents that build your incapacity plan into your overall estate plan.
Living Trust
A revocable living trust is good to have for many reasons, including as security in the event you are ever incapacitated. All strong estate plans include a living trust.
In this trust document, you place assets such as your home, investments, and bank accounts. They move from your name to the trust’s name. You become both trustee and beneficiary.
You manage and use your assets as you always have. A living trust is revocable, which means you can change it later if you wish.
Your trust will list a successor trustee to step in if you die or become incapacitated. Your successor trustee is bound by the instructions you included in the trust.
He or she must manage your assets as you intended. When asked how to create an estate plan, attorneys often recommend living trusts because they provide peace of mind as well as financial protection.
Financial Power of Attorney
As mentioned earlier, the financial Power of Attorney (POA) appoints someone as your agent to pay bills and manage other financial matters. Even if you have a living trust, the POA provides extra securities.
Your POA can be durable, which means it can’t be revoked should you become incapacitated. It can also be springing, which means it doesn’t take effect unless you become incapacitated.
Estate planners understand and can explain the additional advantages of each type of POA.
Medical Power of Attorney
In some states, the medical POA is called a health care proxy or Designation of Patient Advocate (DPA). If you become incapacitated, it gives your chosen agent the authority to make medical decisions for you.
HIPAA Authorization
Federal laws known as th Health Insurance Portability and Accountability Act (HIPPA) are in place to protect your privacy and other patient rights. Medical providers often cannot share your medical information.
If you sign a HIPAA authorization, your medical team can communicate needed information to your family and medical POA.
Living Will
A living will is not the same thing as a medical POA. A living will states your wishes when it comes to end-of-life care.
A living will is not enforceable in all states, but it allows you to convey critical information about your wishes should you become incapacitated and unable to express those wishes when it is time.
Contact Your Estate Planning Attorney
If your estate plan does not have all five of these documents, or if you do not already have an estate plan set up, it is time to talk to an estate planning attorney.
Contact us today to schedule a consultation.