The greatest gift: Planning for incapacity in estate planning

Sep 27, 2023 | Business

Traditional estate planning focuses solely on posthumous matters, neglecting the reality that accidents or illnesses can incapacitate someone before their eventual passing. Unlike death, which is a definitive outcome, incapacity comes with uncertainty, making it a unique challenge to tackle.

Incapacity could be a temporary setback followed by recovery, or it might entail a prolonged period of helplessness leading to death. The unpredictability of incapacity highlights the importance of comprehensive planning.

Incapacity: A greater burden

Surprisingly, incapacity can be a heavier burden on loved ones than death itself. The potential financial strain, emotional distress, court battles and internal conflicts arising from a lack of incapacity planning can be devastating for families. Focusing solely on planning for death leaves families susceptible to potential grave consequences if incapacity strikes. An effective estate plan should strive to prevent conflicts and court involvement, regardless of the situation.

Where to begin: Shifting mindsets

Creating an incapacity plan requires a shift in approach and a different set of tools compared to traditional estate planning. Incapacity planning comes into play while a person is alive but incapable of making decisions independently. It involves designating individuals who will make decisions on the person’s behalf regarding healthcare, finances, and legal matters.

The importance of naming

A crucial aspect is naming these decision-makers. Failing to legally designate individuals can lead to court-appointed guardians who may not align with the person’s wishes. This scenario can create unnecessary hardships and conflicts within the family. Designating decision-makers in advance provides them with immediate legal authority to act on behalf of the individual, without requiring court intervention. It’s vital to remember that if someone doesn’t choose a representative for incapacity, the court will make that decision, potentially leading to unfavorable outcomes.

Family impact: Lessons from the courts

Without proper planning, the court might appoint a guardian who isn’t the individual’s choice to make decisions. This not only robs them of agency but can also result in court battles and family conflicts, causing additional distress to the individual and their loved ones. For instance, disagreements among family members about medical treatment choices can escalate into bitter court disputes. These conflicts are emotionally draining and can drain the estate financially. The appointed guardian might make decisions that directly contradict the individual’s preferences.

Ineffective tools: The role of wills

Wills, often associated with estate planning, are inadequate in addressing incapacity. A will only takes effect after death and governs asset distribution, offering no assistance in preventing family conflicts or court involvement during incapacity.

The right tools for the job

Crafting a comprehensive incapacity plan requires more than a single document; it involves a combination of tailored tools. Depending on the circumstances, these may include:

  • Healthcare power of attorney: Grants an individual immediate legal authority to make medical decisions in case of incapacity.
  • Living will: Provides specific guidance on medical decisions during incapacity.
  • Durable financial power of attorney: Gives someone legal authority over financial and business matters.
  • Revocable living trust: Transfers control of assets to a designated person for the person’s benefit during incapacity.

While these tools are pivotal, their efficacy hinges on guidance from an experienced lawyer who can customize them to the situation. It ensures that unique needs are addressed and the family is prepared for any eventuality.

Empowerment through planning

While the possibility of incapacity can’t be prevented, empowerment comes through creating a comprehensive estate plan that addresses both life and legacy. Such planning safeguards wellbeing and shields the family from potential trauma, disputes, court intervention, and financial strain during a challenging period.

This article is provided by your local estate planning attorney, Corina Colan.

The Law Office of Corina I. Colan / (909) 265-3315 / [email protected] /


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