If you’re like many, you don’t really want to think about what happens if you sustain a serious injury or illness. It’s incredibly challenging if you are healthy. However, planning for it can provide a sense of relief for you and your loved one. You and they will know what to expect and what to do should you become incapacitated and no longer able to make decisions for yourself.
Incapacity planning is essential no matter your age or current health condition. It establishes measures that protect your rights, well-being and assets. While the need increases as you age, unexpected events can strike anyone, leaving them unable to manage their affairs. At AmeriEstate, we want to help you ensure you have the legal protection and peace of mind that comes with an incapacity plan.
What Is Incapacity Planning?
An incapacity plan is a set of legal documents that establish authorizations for handling your finances and making health decisions for you if you cannot do so. As an important estate plan component, it also protects your assets and lays out your wishes.
Why Is Planning for Incapacity Important?
Approximately 1.7 million Americans experience a traumatic brain injury (TBI) yearly, most often due to a car accident or falling. Those over 65 are more likely to sustain a TBI than any age group other than those 15 to 19 years old. However, it can happen to anyone, and this type of unexpected event can have long-lasting emotional, health and financial repercussions.
Though the onset is slower than TBI, dementia and Alzheimer’s are other all-too-common incapacitating conditions, with an estimated 500,000 new Alzheimer’s cases annually. These diseases have severe impacts on families and can strain resources.
TBI and dementia are just two examples of events that cause incapacitation. While you don’t know if either will happen to you, incapacity planning prepares you for the possibility. With the right documents in place:
- Health decisions and finances are in the hands of people you trust, not the courts.
- Your loved ones won’t have to endure guardianship proceedings, which are stressful and costly.
- You can make critical medical decisions before they’re needed, including determining which procedures are acceptable in an emergency and which aren’t.
- Your loved ones won’t face making hard decisions about your care, medical interventions, or finances.
Incapacity planning provides protection and peace of mind.
What’s Involved in Incapacity Planning?
AmeriEstate’s attorneys work with you to customize an incapacity plan that meets your needs and reflects your situation. Together, we discuss your wishes and evaluate your assets before completing the required documentation. Generally, incapacity planning involves establishing financial and medical safeguards with five recommended legal documents.
1. Financial Power of Attorney
The individual you appoint as your financial power of attorney will be the one to handle your financial affairs if you become incapacitated. This person typically:
- Pays your bills and taxes
- Manages your real estate, including paying mortgages or selling property
- Manages any investments you have
Your designee will also handle any other financial decisions and legal matters. With a financial power of attorney, you and your loved ones know who is in charge of your finances if you become incapacitated.
2. Revocable Living Trust
We always recommend a revocable living trust in addition to a financial power of attorney. The revocable living trust protects your assets while allowing you to remain in control of them until you become incapacitated or pass away. Furthermore, a revocable living trust supports and adds weight to your financial power of attorney if a financial institution is reluctant to accept the latter.
A revocable living trust has three roles:
- Grantor: This person creates the trust and owns the assets that go into the trust. You would be the grantor (also known as the trustor).
- Trustee: This individual manages the assets in the trust. While you are still capable, you would be the trustee. You may also designate a co-trustee who would share decision-making power with you. You would also want to name a successor trustee who would manage your assets should you become incapacitated.
- Beneficiaries: The beneficiaries are those who receive the assets in the trust. While you are still alive, you can establish yourself as the sole beneficiary, only transferring assets to your heirs upon your death. However, you also have the option to designate other beneficiaries while you are alive, giving them a portion of the trust while you are alive. Often, people name their spouses as co-beneficiaries.
A living trust protects your assets during incapacitation and prevents them from entering probate if you pass away. You have a right to withdraw or change any element of the trust, which is what makes it revocable.
3. Medical Power of Attorney
Incapacity planning also involves designating someone to make medical decisions for you. This person is also called a medical or healthcare proxy. Your designee will coordinate physical and medical care if you cannot do so. They would also have the power to choose medical treatments. Appointing someone you trust is essential, but you also need to make your preferences known.
4. Living Will
A living will formalizes your wishes for end-of-life decisions. You may also hear it referred to as an advanced healthcare directive. In this document, you can indicate what measures you want medical professionals and your family to take if you cannot communicate when the time comes.
Though a do-not-resuscitate order is usually a component, you should also provide details for any other interventions or treatments you do or do not want. Depending on where you live, a living will may not be a legally recognized document. However, it still provides guidance and ensures your wishes are known.
5. HIPAA Authorization
The Health Insurance Portability and Accountability Act protects your right to privacy, safeguarding your health information. Completing the HIPAA authorization form permits medical practitioners to disclose medical information to your designated agent.
How Do You Get Help With Incapacity Planning?
AmeriEstate’s attorneys are here to help you with incapacity planning. We offer personalized and affordable services for people just like you, all over the phone for your convenience. Contact us today for a free consultation.