As elder law attorneys, we are forced to educate clients about some uncomfortable realities. If you stick your head in the sand, difficult situations can be all the worse when they arise if you are completely unprepared. With this in mind, we will look at the importance of incapacity planning in this blog post.
The Twilight Years
When you are thinking about the life that you will live when you are a senior citizen, you probably envision the active retirement years. Without question, if you take the right steps along the way to develop the appropriate financial underpinning, you can have a great time when you put your working career behind you. This interim can be lengthy if you are fortunate enough to enjoy good health.
If you are a man celebrating your 70th birthday, your life expectancy is at least 85 years. The number is 87.5 years for a women that is 70 years of age. As the years pass, it may become more and more difficult to handle all of your activities of daily living.
In addition to the mobility issues, octogenarians often become unable to make sound decisions on their own. There are various different causes of incapacity, but Alzheimer’s disease is at the top of the list. It strikes four out of every 10 people that are 85 years of age and older.
If you do not take any steps in advance to prepare for possible incapacity, the state could be petitioned to appoint a guardian to take care of your personal and financial affairs. You would have no meaningful input into the decision-making process at that point. Most people would prefer to choose their own decision-makers in advance when they are still capable of making sound decisions.
Plus, a guardianship proceeding can be lengthy and potentially contentious if everyone in your family is not on the same page with regard to the appropriate way to go forward. This type of acrimony is very counterproductive during a time when people close to you should ideally be coming together to support one another.
Hopefully, you will never be in a situation where you cannot handle all of your affairs effectively. However, to protect yourself and your family, you can address the situation in advance through the inclusion of an incapacity plan within your broader estate plan.
We often espouse the benefits of revocable living trusts when people come into the office for initial consultations. One of the advantages is the ability to prepare for incapacity. You can name a disability trustee in the trust declaration that would be empowered to administer the trust in the event of your incapacitation.
This would be a partial solution, because there would probably be assets that are still in your direct personal possession. To account for this, you could execute a durable financial power of attorney. This would give the agent or attorney-in-fact that you name the power to handle your financial affairs.
Of course, you would want to include one of these documents if you are using will instead of a living trust. We should point out the fact that the “durable” designation is important, because a standard power of attorney that is not durable would not be honored if the grantor was to become incapacitated.
In addition to the monetary side of the equation, health care decision-making must be accounted for when you are devising your incapacity plan. First, you should include a living will expressing your preferences with regard to the utilization of life-sustaining measures if you ever fall into a terminal condition.
This is an advance directive for health care, and another one that should be part of the plan is a health care proxy. With this document, you name someone to make medical decisions on your behalf that are not related to life support.
Learn More About Estate Planning!
If you would like to learn more about this and other important estate planning topics, attend one of our upcoming seminars. There is no charge, and you can see the schedule and obtain registration information if you visit our seminar page.