What You Need to Know About Incapacity Planning
While an estate plan can protect your legacy and provide for your family in the event of your death, it can also be useful if you become incapacitated. Through incapacity planning you can detail how you would like your affairs to be managed when you are not capable of managing them yourself. Here we’ve outlined some of the key documents needed when planning for incapacitation.
What is Incapacity Planning?
If you are severely injured, contract a serious illness, or experience other debilitating health issues, you might become incapacitated. For example, if you suffer trauma in a car accident and have to be placed in a coma, you will not be able to make financial, legal, business, or healthcare decisions for yourself.
Incapacity planning involves taking steps to prepare for potential incapacitation. You can do this by drafting documents that make your wishes clear so that your family isn’t in the dark regarding how your financial and medical affairs should be handled. Putting your wishes in writing can significantly reduce stress for your loved ones and prevent emotional disputes from arising amongst family members.
Durable Power of Attorney
Every estate plan should include a durable power of attorney, or DPOA. A DPOA is a document that designates another person to manage your personal and financial affairs if you are incapacitated. A DPOA can pay bills on your behalf, oversee your investments, file your taxes, and manage your bank accounts.
You must be of sound mind when establishing a DPOA, and the person you appoint to make decisions on your behalf should be someone you trust.
Medical Power of Attorney
A medical power of attorney is similar to a DPOA, except a medical power of attorney has the authority to make medical decisions on your behalf if you become incapacitated. A DPOA only has the authority to make personal and financial decisions for you. Without a medical power of attorney in place, your family may not know how you would like to be cared for, which can cause confusion and conflict.
Last Will and Testament
Including a will in your estate plan lets your family know how you would like your property and assets to be handled in the event of your death. If you have young children, you can also use a last will and testament to name their new guardian. If you pass away without creating a will, then a court will be responsible for dividing your assets in probate, and they may not be distributed according to your wishes. The court can also appoint a new guardian for any minor children you have, but there’s no guarantee that the guardian the court selects would be the one you would ideally choose.
One way to help your family avoid the probate process is to establish and fund a revocable living trust. While you are alive, you place assets into the trust, which you maintain complete control over. These assets can be used to provide for your family and children after you have passed away. When establishing a living trust, you will assign a successor to manage the trust if you become incapacitated or die. You will need to outline the necessary steps for discerning your incapacitation and establish medical directives for your physicians to follow.
Contact the Law Offices of Stephanie D. Hon today to get started on your estate plan. We have the necessary tools to help you prepare for the future. Estate plans are legally binding, so hiring a trusted attorney to help you draft thorough and accurate documents is crucial for your and your family’s peace of mind.
By properly planning for incapacitation, you can protect your family, assets, finances, business dealings, and leave instructions for your medical care. Call our office today at 512-888-9378 to schedule a free initial consultation.