26th Oct 2015
Your life can change in an instant. One day you are here and the next day you are gone. Estate planning is vital when dealing with a loved one after they have passed, but it is also just as important if they were to become incapacitated. When a person becomes incapacitated decisions will have to be made. Who will be in charge of their finances and who will make the tough medical decisions? All of these questions will be answered and give you the course of action needed to plan your estate when incapacitated.
Without a proper estate plan in place, if you are in an accident, injured, or illness befalls you leaving you incapable of making informed and sound decision about your finances and well-being, a judge can appoint someone to make healthcare and financial decisions on your behalf under a court-supervised guardianship or conservatorship.
Countless people believe that having a joint account with their spouse, child, or other family member will protect their assets allowing the joint holder access to pay bills or manage investments. What you are not aware of is that a joint owner of real estate will not be able to mortgage or sell the property without the permission of the other owner. If a joint owner is sued, the property could be seized and used as a judgement against them.
Managing Finances While Incapacitated
Financial Power of Attorney. A financial POA is a legal document that authorizes someone to act on their behalf when it comes to paying bills, making financial decisions, managing investments, filing tax returns, mortgaging and selling real estate, and any other financial matter that is set forth. A “Durable” power of attorney becomes effective immediately and is used when someone can’t be present or needs to be represented. A “Springing” power of attorney will go into effect when the person is incapacitated or deemed mentally or physically powerless in making decisions on their own.
Revocable Living Trust. There are three parts to this legal document. First there is the person that creates the trust, the “Trustmaker.” The “Trustee” manages the assets of the trust and the person that benefits from the assets is the “Beneficiary.” The Trustmaker is typically the Trustee and Beneficiary of their own trust. If the Trustmaker/Trustee/Beneficiary are considered mentally unfit, someone else must take over as the Successor Trustee to manage the trust assets.
A properly planned revocable living trust should encompass requirements to establish the inability of the Trustmaker/Trustee/Beneficiary utilizing a private method such as a second opinion, a disability panel, or other private method. A Trust should also have detailed directions on how to take care of the debilitated Trustmaker.
Documents for Healthcare Decision Making
Power of Attorney for Health Care Decisions. This legal document allows you to select a person that you want to make healthcare decisions for you if or when you become unable to make them for yourself. They would be your representative in all matters in healthcare decision making.
Advance Health Care Directive. An Advance Directive is a written statement specifying a person’s wishes regarding their medical treatment in conditions which they are no longer able to express informed consent.
HIPPA Authorization. This legal document allows doctors or health care providers permission to disclose medical information to whomever the patient authorizes. This can be a separate document or included within the Power of Attorney for Health Care.
Medical treatment when you are incapacitated can cause a world or heartache such was the case of Terri Schiavo. Her husband and family fought with the courts for 15 years on what course of treatment she did or did not want. Having a plan in place before the unknown happens is imperative, so there is no hassle of a judge appointed guardian or conservatorship. Frequently update and revise these documents as your preferences change.
Choosing the Right Agent
You must choose the best possible representative to manage your finances and your medical decisions if you are to become incapacitated. So, how do you choose the right candidate? It could pose difficult to communicate with your doctors or manage your assets, so consider whether or not it is better to have someone that lives in proximity or someone who lives in another state or country. Will your representative have the time to manage the demands to run your estate? You’ll want to choose someone that will not be overloaded or overwhelmed with decision making. Do they have experience in dealing with finances or are they knowledgeable in health care? An agent with more knowledge in these fields would be the best choice.
Carefully consider your options when choosing your facilitator and do have a conversation with them to confirm they would be ready if or when the time comes. The wrong choice can lead to an ineffective incapacity plan.
For questions, or to schedule a consultation, call the office today at 714 385 0044.