When you make an estate plan, you’re writing down what you want to happen once you’re no longer around to make those decisions. However, it is possible to be physically or mentally incapacitated and no longer capable of managing your own affairs. A well-drafted estate plan takes into account these situations as well, providing guidance for your care and the management of your assets even when you’re still alive but no longer able to handle them yourself.
With proper planning, you can manage who handles your assets and makes medical and care decisions for you in the event of a short- or long-term incapacity. This can be due to an injury, stroke, heart attack, dementia, or other cause and can range in time from a few hours to the remainder of your life. A will only address what happens after you die, it takes a different type of planning to address lifetime incapacity.
Powers of Attorney and Healthcare Directives
Having a durable power of attorney and a healthcare directive in place is one way to address these issues. If you are incapacitated, then the holders of these documents step up to make decisions on managing your assets and finances and making healthcare decisions.
While you may provide guidance on how you want decisions made, particularly healthcare decisions, the choices made will likely align with a doctor’s prognosis of your long term prospects and health. Someone with minimal assets that is facing several years of dementia will need very different financial management than someone who is only facing a short-term incapacity due to a car accident.
Without appropriate planning, you are relying on the court to make decisions and appoint someone to act as guardian for you. The court will have oversight to determine the best course of action and can be an expensive process, especially if there is a disagreement between parties on how your assets should be handled. Finally, if you want to appoint someone other than a family member to manage your assets and make decisions, you will want to have the appropriate documentation in place.
Revocable Living Trust
Another way to plan for incapacity, especially when you have a condition where you expect it to happen, is to set up a revocable living trust. You then transfer your assets into the trust and continue to control those assets during your lifetime as the trustee of the trust. Once you are incapacitated, your successor trustee steps directly into your shoes and takes over management, leaving no assets for the court to direct and control. If you regain capacity, then you step back into control of the trust. Further, you can leave detailed instructions for the trustee to execute.
Revocable trusts have other advantages. Banks more readily accept trust management and changes in who is managing the business of the trust. Further, the trustee he held to a high standard.
Deciding the right path to take with your assets in the event you are incapacitated is a discussion that you should have with your estate attorney. At Dunn Law Firm, we take the time to get to know you and your specific situation in order to create a comprehensive estate plan that meets your goals. To learn more, reach out to the Dunn Law Firm by calling (435) 628-5405 to set up a free consultation today.