Incapacity Planning in Your Estate Plan


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When most people think of estate planning, they think about a will and other documents that they should put in place in case they die. A personís goals with an estate plan may be to provide for their family, distribute their wealth after they have died and to avoid the probate process. However, an integral part of an estate plan is planning for possible incapacitation.

A solid estate plan should provide important guidance to follow if the individual becomes incapacitated. Incapacitation may be the result of a long-term illness like dementia or Alzheimerís. Alternatively, it may be due to a sudden accident or illness. If a person does not have certain documents in place, families can be confused about what the person would have wanted under the circumstance. Additionally, more intensive procedures may be necessary in order to make decisions, such as getting a court order for medical treatment or acquiring guardianship over a person.

Important components of an estate plan that included incapacity planning include:

Financial Power of Attorney

A power of attorney for financial purposes allows a person to conduct financial transactions and make financial decisions on behalf of someone else. The principal can execute a document that allows the agent he or she names to pay their bills and manage finances if the principal becomes incapacitated. A power of attorney should be durable in nature in order for it to remain effective upon the principalís incapacitation. A principal can decide which financial powers to grant the agent. Additionally, he or she can state when it goes into effect, such as immediately or only upon a person becoming incapacitated.

Healthcare Power of Attorney

A healthcare power of attorney, healthcare proxy or designation of patient advocate is a person who has been given the authority to make medical decisions on someone elseís behalf if he or she is unable to make these decisions at the time. The document may include specific instructions that the principal wants the agent to follow or the principal may talk to the agent at a time when immediate medical decisions do not have to be made to discuss his or her wishes.

Living Will

A living will or advance directive provides end-of-life directions that a person establishes for himself or herself. This document may describe the type of treatment that a person may or may not want under the circumstances. For example, the individual may indicate whether he or she does or does not want CPR, feeding tubes, treatment for new medical conditions, blood transfusions or other important types of medical treatment. This document communicates a personís wishes regarding desired medical treatment to his or her medical providers.

States treat living wills differently. Some states will not enforce a living will over the statement of a doctorís belief in what is in the best interest of the patient. Others have it trump any other medical document in place. Others allow a healthcare power of attorney to override statements made in a living will.

HIPAA Authorization

Another important document that may be part of incapacity planning is a HIPAA authorization. Medical providers must carefully follow privacy laws regarding maintaining the confidentiality of patient records. A HIPAA authorization allows a person to allow his or her medical provider to communicate important medical information about him or her to his or her healthcare power of attorney.

Living Revocable Trust

Another important document that may help in the event of incapacity planning is a living revocable trust. This document can retain ownership of assets that you title to it. It contains instructions on how the trustee should treat these assets. Including a clause regarding the use of funds can help protect a person during his or her life while providing for the treatment of these funds after his or her death. The trust may state that the trust funds can be used to pay for the medical expenses, care and support of the trust grantor before the fund are used on other beneficiaries.

Contact an Estate Planning Lawyer for Assistance in Developing an Incapacity Plan

If you would like to incorporate incapacity planning into your estate plan, contact an experienced estate planning lawyer for assistance. He or she can describe various documents that can be put in place to protect you in the event of incapacitation. He or she can talk you through various ways that you can protect your financial and legal interests. He or she can also explain which documents and other arrangements that should be part of your estate plan.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.

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