Many people do not realize that estate planning includes more than planning for the distribution of your property after your death. A significant part of estate planning deals with planning for incapacity. This means planning for your healthcare as well as financial decisions if you become incapacitated.
An individual is considered incapacitated when they cannot make or communicate decisions independently due to a serious illness, injury, or general cognitive decline. Although your risk of becoming incapacitated increases with age, it can happen to anyone at any time, so it is critical to be prepared.
How do Estate Planning Tools deal with Incapacity in Phoenix?
There are certain estate planning tools that you should include in your Phoenix estate plan, so you are protected if you become incapacitated.
Financial Power of Attorney. A power of attorney designates an individual of your choosing to manage your personal finances and other day-to-day decisions on your behalf if your become incapacitated. You can give your agent the ability to pay bills, handle bank accounts, file taxes, manage investments, or sell property.
Anyone over 18 and mentally competent can act as an agent. Most people pick their spouse, adult child, or trusted friend to act as their agent. A financial power of attorney can go into effect after you are determined to be incapacitated so that your financial matters do not suffer while you are incapacitated. You can end the financial power of attorney once you are recovered.
Healthcare Power of Attorney. A healthcare power of attorney (also called a medical power of attorney) designates an individual of your choosing to make medical decisions on your behalf if you are incapacitated. The powers you grant your agent can be broad or limited, and you can include instructions for them to follow. Examples of actions that your agent could take include:
- Accessing medical records;
- Deciding on drug treatments,
- Deciding where you will receive care (e.g., assisted living, nursing home, residential long-term care, etc.); and
- Giving or denying consent for medical treatments.
Hospitals, doctors, and other medical professionals must follow your agent’s decisions as if they were your own.
Living Will. A living will state your wishes for end-of-life care. You can include your preferences for feeding tubes, ventilators, palliative care, organ donation, and other medical care. Many individuals do not like the idea of their life being prolonged through artificial means when they have little to no chance of recovery, especially when it means running up significant medical expenses. With a living will, you can give your family permission to let you die peacefully on your own terms.
Revocable Living Trust. One of the benefits of a revocable living trust is that it allows your successor trustee to automatically manage the trust assets if you become incapacitated. The trustee will be able to access the trust property to pay your medical expenses and provide for any loved ones that were under your care. Within the trust, you can include instructions for how you and your loved ones should be financially supported.
The revocable living trust works in conjunction with your durable power of attorney. Typically, the agent of your durable power of attorney is also the successor trustee of your living trust.
What Happens If You Do Not Plan for Incapacity in Phoenix?
If you become incapacitated without a proper plan in place, it is likely that your family will have to go through a court process to obtain guardianship or conservatorship. The guardianship process is expensive and time-consuming. Once the guardianship is established, the guardian is required to file annual accountings with the court, documenting how the ward’s assets are being used. This process can add significant emotional distress to your family during an already stressful time.
In addition, you will have no control over the decisions made regarding your medical care and finances during your incapacitation. Your family will be forced to guess what you would have wanted and carry the burden of making these important decisions with no direction. This can lead to conflicts when loved ones disagree on what is in their best interests. Planning for your incapacity is an invaluable gift to give your loved ones.
Your Phoenix Estate Planning Attorney
Nicole Pavlik is an experienced Phoenix estate planning attorney who help you create a comprehensive estate plan that plans for incapacity. If you have questions about estate planning, contact Nicole Pavlik Law Firm today online or by calling (602) 635-6176 for a consultation.