When you think of creating an estate plan you likely think about executing a Last Will and Testament to ensure that your estate assets are distributed according to your wishes after you are gone. While planning for the distribution of your estate assets is certainly one important aspect of a comprehensive estate plan, it should not be the sole focus of an estate plan. On the contrary, a well thought out estate plan should include a variety of additional inter-related components, including an incapacity plan. After all, incapacity is not something that only occurs the elderly. Incapacity can strike anyone at any time. Having an incapacity plan within your overall estate plan is the best way to protect yourself, your assets, and your loved ones in the event you do suffer a period of incapacity.
Incapacity Fact and Figures
Like many people, you may associate the term “incapacity” with an old age-related condition such as Alzheimer’s disease. While age-related dementia certainly can be the cause of incapacity, it is hardly the only cause. In fact, you might be shocked to learn how likely you are to suffer a period of incapacity long before you reach old age. Consider the following facts and figures published by the Council for Disability Awareness:
- Just over 1 in 4 of today's 20-year-olds will become disabled before they retire.
- Over 37 million Americans are classified as disabled; about 12% of the total population. More than 50% of those disabled Americans are in their working years, from 18-64
- An otherwise healthy 35-year-old female has a 24% chance of becoming disabled for 3 months or longer during her working career.
- An otherwise healthy 35-year-old male has a 21% chance of becoming disabled for 3 months or longer during his working career.
- The average length of disability for that 35-year-old female or male is 82 months.
What Happens If You Do Not Have an Incapacity Plan in Place?
Often, the best way to illustrate the need for something is to point out what happens without it. Imagine that you are incapacitated tomorrow as a result of a tragic motor vehicle collision or a serious workplace accident. Can you answer the following questions?
- Who will make healthcare decisions for you if you cannot make them?
- Who will take over control of your assets and property?
- Who will handle paying your bills and monitor your finances?
- Who will make personal decision for you such as where you will live?
Unless you have an incapacity plan in place, the answers to these questions remain uncertain. Even if you are married, there is no guarantee that your spouse will have the legal authority to take over all decision making for you nor have the legal authority necessary to take over your assets. All too often, what happens is that family members end up in a conflict over who will make decisions and take over control. That conflict sometimes ends up in a protracted, and costly court battle that may create a permanent divide in the family. In the meantime, both you and your assets remain in limbo. The easy way to prevent all of this from occurring is to include an incapacity component in your comprehensive estate plan.
What Might Be Included in My Incapacity Plan?
Every incapacity plan is unique because it is created to meet the needs of the creator; however, some common additions to an incapacity plan include:
- Power of attorney – allows you to appoint an Agent who will have your legal authority to act on your behalf in general, or specific, situations.
- Advanced directive – allows you to appoint an Agent to make healthcare decisions for you if you cannot make them yourself.
- Revocable living trust – works by allowing you to appoint yourself as the Trustee of the trust and your designated successor as the successor Trustee. Assets are then transferred into the trust and you continue to manage them, as the Trustee, as long as you are able to do so. If you become incapacitated, the successor Trustee automatically takes over the management of those assets without the need for court approval.
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about incapacity planning, contact an experienced estate planning attorney at Morris Hall PLLC by calling 888-222-1328 to schedule your appointment today.