Planning for Incapacity

04/22/2011

When most people think about estate planning, they focus on death and who will get their property when they pass away.  There is no question that this is an important aspect of estate planning, but it is not the only aspect to consider.  Planning for disability is another area that people should consider.  Developing an arrangement that addresses the possibility of a diability or a future disease and its progression can help you maintain control, even as your health declines.

So what does planning for a disability involve?

First, it is important to line up someone who can take legal and financial action for you if you become incapacitated. These chosen people should be lined up and documented in a legal document that is referred to as a power of attorney.  

The people you choose to handle your legal or financial affairs are esignated as your "agent."  In a power of attorney you can grant your agent the ability to perform a range of activities on your behalf, from paying bills, filing tax returns and overseeing retirement accounts to selling property and making investments.  You can set the scope of the agent's authority and spell out whether the power of attorney becomes effective immediately or "springs" into effect when you become incapacitated.

A power of attorney does not always allow someone to make health-care decisions for you.  For that you need a living will and/or a power of attorney for healthcare.

These are particularly important for individuals with chronic illnesses who can lapse into a debilitated state very quickly. Without a healthcare power of attorney, a friend or relative of an ill patient would have to go to court to be appointed as guardian and get approval to make any medical or legal decisions.

A living will is a separate but related document to a health care power of attorney.  A living will states your end-of-life wishes. These include your feelings about the use of ventilators or artificial nutrition to keep you alive. Your agent is bound to follow your wishes. It is a good idea to have both a living will and healthcare power of attorney to make your wishes clearly known when you can't communicate them.