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A comprehensive estate plan shouldn’t only address your wishes after you pass. It should also specify how your financial, personal, legal, and healthcare matters will be handled in the event you become incapacitated and cannot make decisions for yourself. Incapacity planning involves carefully considering who you will appoint to make decisions on your behalf — and executing the legal documents necessary to ensure your objectives are met. There are a number of legal tools available and each one works differently to ensure your incapacity plan is tailored to satisfy your goals.

Why Incapacity Planning is Important

Incapacity planning addresses the matters that a last will and testament cannot. While a will only becomes effective upon death, an incapacity plan specifies who takes over your responsibilities if you have suffered an injury or develop an illness that results in incapacitation. In other words, unlike a will, an incapacity plan goes into effect during your lifetime. It is triggered by an event that renders you incapable of making informed decisions about financial, healthcare, and legal issues.

It’s vital to ensure you put an incapacity plan in place while you are still of sound mind. Once you have become incapacitated, it may be too late to put your affairs in order — and any documents you execute may be deemed void.

What Documents Can Be Used to Plan for Incapacity?

Accidents can arise at any time, and incapacity planning is crucial for a person of any age. A good incapacity plan addresses every possible “what-if” that could occur and can be customized to fit your needs. In addition to designating a trusted individual with the authority to handle your business affairs, an incapacity plan should also specify what type of life-saving medical treatment you would like to receive (or not receive).

A comprehensive incapacity plan can include the following documents:

  • Financial power of attorney — This document authorizes an individual of your choice to make critical financial decisions on your behalf, pay your bills, file your taxes, sell your real estate, and handle a broad scope of financial matters.
  • Living will — A living will outlines your wishes for end of life care if you are incapacitated and cannot express them. While many states recognize this as a separate document, it is combined with an advance healthcare directive in California.
  • Advance healthcare directive — This document gives the person you designate the authority to make healthcare decisions on your behalf if you become incapacitated. A healthcare directive can also address issues such as life support, pain medication, and organ donation.
  • HIPAA authorization — A fully executed HIPAA authorization gives your healthcare provider permission to disclose your medical information to the agent you select. Healthcare privacy laws may prevent your family or agents from learning about your health condition without this release.
  • Revocable living trust — A revocable living trust is an incapacity planning tool. As the creator of the trust, you can name yourself as trustee and remain in control of your assets. Should you become incapacitated, the individual you named as successor trustee can step in and manage the assets on your behalf without the need for court involvement.

It’s a good idea to review your incapacity plan periodically to ensure that it reflects your current wishes. You may also want to consider updating your documents if you divorce and your authorized agent was your former spouse, or the individual you designated as your agent has passed away.

What Happens if You Don’t Plan for Incapacity?

If you don’t have an incapacity plan in place, you risk having the court appoint a conservator should you become unable to manage your affairs. In California, there are two types of conservatorships: conservatorship of the person and conservatorship of the estate. With a conservatorship of the person, the individual appointed by the judge is responsible for ensuring the person in need of the conservator has the food, clothing, shelter, and healthcare. A conservatorship of the estate allows an individual to handle the conservatee’s financial matters.

Significantly, the individual the court appoints as your conservator may not be the person you wish to make decisions on your behalf. By having a comprehensive incapacity plan in place, you can ensure the individual of your choice is the person designated to handle your affairs — rather than allow a judge who doesn’t know you or your family determine the outcome. Planning in advance can also potentially save your loved ones from incurring the costs that can come with the lengthy and time-consuming litigation often associated with conservatorship proceedings.

Contact an Experienced Fresno Estate Planning Attorney

No one wants to think about the unexpected — but it’s important to understand that a skillfully drafted incapacity plan can carry out your wishes and help to protect your loved ones in the event of an accident or disabling illness. Offering compassionate counsel and reliable representation, The Law Offices of Rick D. Banks has been helping clients throughout Fresno and the surrounding area with their incapacity and estate planning matters for over 20 years. To schedule a no obligation consultation, call (559) 222-4891.

Categories: Estate Planning