The motivation behind creating an estate plan typically comes from the desire to protect and provide for loved ones. While that motivation may initially be a result of the knowledge of your own immortality, death is not the only threat to the stability and safety of you and your loved ones. Your own incapacity could also be a threat. With that in mind, the Los Angeles living trust attorneys at Collins Law Firm urge you to reflect on whether you have an incapacity plan within your estate plan or not. If not, maybe now is the time to get started.
Incapacity Is Not Just for the Elderly
All too often, when people think about the possibility of becoming incapacitated they immediately associate that possibility with old age. While the natural aging process itself, helped along by conditions such as Alzheimer’s disease, do certainly result in incapacity frequently, incapacity is not limited to the elderly. On the contrary, incapacity can strike anyone at any age as a result of a workplace injury, a serious illness, or even a car crash. To help you understand the need to plan for the possibility of your own incapacity, consider the following facts and figures:
- Just over 1 in 4 of today’s 20 year-olds will become disabled before they retire
- In December of 2012, there were over 2.5 million disabled workers in their 20s, 30s, and 40s receiving SSDI benefits.
- A typical 35-year-old has a 24% chance of becoming disabled for 3 months or longer during his/her working career. Moreover, that same worker has a
- 38% chance that the disability would last 5 years or longer,
- with the average disability for someone like him/her lasting 82 months
- Stroke is a leading cause of long-term disability
- 34% of people hospitalized in 2009 for stroke were younger than 65 years of age
What Happens If You Are Incapacitated?
The real question is what will happen to you and your estate if incapacity does strike? Do not make assumptions such as your spouse will handle everything. In some cases your spouse may have the legal authority to take control and/or make decisions; however, even a spouse may not have authority to take care of everything during your period of incapacity. If you are not married, the question becomes even more important. If you fail to plan ahead by choosing for yourself who will be granted decision-making authority and who will take control of your estate, a judge may end up deciding for you – but not before a divisive and costly legal battle in many cases. Families can end up choosing sides when more than one family member petitions a court for the right to make decisions for you and/or to control your assets. The legal battle that ensues may leave scars for a long time to come – AND the court may still appoint someone you would never have chosen yourself!
Planning Ahead – Creating a Living Trust
The simple way to both avoid a family feud and ensure that the person making decisions for you and controlling your assets is someone you approve of is to incorporate incapacity planning into your overall estate plan now. One of the most popular incapacity planning tools is a revocable living trust. By creating a revocable living trust you decide ahead of time who will control your estate assets in the event of your incapacity. It works by allowing you to appoint yourself as the Trustee of the trust and appoint someone of your choosing as the successor Trustee. Your estate assets are then transferred into the trust. Because you are the Trustee, you continue to control those assets just as before; however, if you become incapacitated the successor Trustee (chosen by you) takes over as Trustee, thereby shifting control of your assets to the person of your choice without the need for court intervention. Moreover, when you recover you can resume your position as Trustee as if nothing happened. Finally, because the trust is revocable, you can move assets in and out of the trust with ease and even replace the successor Trustee if you wish to do so at any time.
Contact the Collins Law Group
For more information or if you have additional questions or concerns relating to incapacity planning using a living trust, consult with Attorney Collins. Contact the Collins Law Group by calling (310) 677-9787 to register for one of our FREE estate planning workshops.
- Attorney Caprice L. Collins Asks: Do You Have an Incapacity Plan? - March 21, 2018