Everyone understands the importance of retirement planning. People generally recognize the need to engage in estate planning as well. However, there is a period of time that may lie between your active retirement years and your passing.
This is the phase of life that we call the twilight years. During this stage, you may suffer from incapacity. You could become physically incapacitated and unable to communicate either temporarily or permanently. There is also the possibility of mental incapacity.
Who would manage your financial affairs in the event of your incapacitation?
If you were to become unable to make sound financial decisions on your own, interested parties could petition the state to appoint a conservator to act on your behalf. This is a positive safeguard on the one hand, but there are some potential negatives that can go along with a conservatorship.
Immediate decision-making may be necessary. A conservatorship hearing can be time-consuming, especially if family members do not agree on all the details.
In addition to this, the conservator that is ultimately empowered by the court may not be the person that you would have chosen yourself when you were of sound mind
Durable Power of Attorney
It is possible to prevent a conservatorship hearing through proactive incapacity planning. This is typically going to include the execution of a document called a durable power of attorney.
If you are creating the power of attorney, you are called the grantor or principal. When you are creating the document, you name an agent or attorney-in-fact. This is the person who will be empowered to manage your financial affairs in the event of your incapacitation.
You use a durable power of attorney for this purpose because this type of POA will remain effective upon the incapacitation of the grantor. A power of attorney that is not designated as durable would no longer be in effect if the grantor was to become incapacitated.
A durable power of attorney would typically become effective immediately. You could technically set some specific date in the future, but you would have no way of knowing when you may become incapacitated.
If you do not want to give the power immediately, you could consider the execution of a springing durable power of attorney. This type of power of attorney does not go into effect until and unless you become incapacitated.
This can sound like the ideal solution on the surface. However, there can be some difficulties that arise if you go this route. The attorney-in-fact would be compelled to prove that you are in fact incapacitated. This can require the presentation of medical proof, and disputes could arise.
Incapacity Is Common
You may not be especially concerned about incapacity planning because you are under the impression that you will probably never become incapacitated. If you feel this way, you should understand some facts about Alzheimer’s disease.
The Alzheimer’s Association does a lot of good work educating the public about this widespread disease. According to their website, approximately 13 percent of all senior citizens suffer from Alzheimer’s disease. Alzheimer’s causes dementia, which can make it impossible for sufferers to make sound decisions.
This is a significant percentage in and of itself. However, as you get older it becomes more and more likely that you will contract Alzheimer’s disease. Some 45 percent of the oldest old (people 85 and older) suffer from Alzheimer’s disease.
It is becoming increasingly likely that you will in fact live into your 80s and beyond. According to the most recent census, the oldest segment of the population is growing faster than any other. Medical science constantly advances, so it would be logical to assume that lifespans will continually increase.
When you digest these statistics you can see that Alzheimer’s disease alone would be enough to compel you to put an incapacity plan in place. However, Alzheimer’s disease is not the only cause of dementia, and dementia is not the only form of incapacity.
Contact Us to Schedule a Consultation
When you are making preparations for the eventualities of aging, you should consider the possibility of incapacity late in your life. If you take the right steps in advance, you can be prepared, and there can be a hand-picked decision-maker standing at the ready to handle your affairs if you ever become unable to manage them on your own.
If you are interested in the possibility of working with our firm after learning these facts, please select our “Workshops” tab to RSVP for a free estate planning workshop. At that workshop you will be offered a free one-hour consultation with an attorney: https://collinslawgroup.comseminars/
- Who Will Administer My Estate If My Executor Cannot Serve? - July 30, 2021
- What You Should Consider When Creating a Trust - July 27, 2021
- How to Leave Assets for Your Minor Children in Your Estate Plan - July 21, 2021