Estate Planning 101 – Incapacity
When most people hear “estate planning”, they think about post-death. Yet, a sound estate plan also deals with incapacity. None of us can predict Alzheimer’s or stroke. Therefore, it’s best to be prepared. What follows is a summary of the key estate planning documents for addressing incapacity.
Durable Power of Attorney
In a durable power of attorney, you appoint an agent to make decisions regarding your finances and health care. A durable power of attorney can be either immediate or springing. An immediate durable power of attorney is effective as soon as you sign it. By contrast, a springing durable power of attorney takes effect only in the event you are determined to be incompetent. Most springing durable powers of attorney require two doctors to make this decision.
Living Trust
The living trust is an excellent tool for managing incapacity. Banks and financial institutions sometimes refuse to work with an agent under a durable power of attorney. In other cases, they could mandate the execution of additional forms. Successors trustees almost never face such difficulties. Moreover, with a living trust, you have the freedom to define incapacity however you like. For example, you can designate a special panel of people – comprised of doctors, family members and even your pastor – to make the decision concerning your incapacity.
Advance Directive for Health Care
An Advance Directive for Health Care sets forth your wishes on end-of-life treatment. This is important since opinions pertaining to life support vary widely. By making your wishes known ahead of time, you can remove the burden on your loved ones and lessen the likelihood of emotional disputes. An Advance Directive does one more thing: it gives you a chance to donate your organs and other body parts to transplantation and research.
Conclusion
While incapacity is unsettling, it’s a possibility everyone must confront. A durable power of attorney, living trust and Advance Directive for Health Care help ensure that you will be treated with dignity both during your life and after death.