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One very important part of estate planning that is often overlooked is Incapacity or Disability Planning. Most people view estate planning as planning for what happens after you die. However, what would happen if you became mentally incapacitated?
To take care of yourself and to maintain control of your financial affairs during a period of incapacity, you should have an Advance Medical Directive, a Financial Power of Attorney, and, in some cases, a Revocable Living Trust.
An Advance Medical Directive will allow you to appoint someone you trust to make health care decisions for you if you are unable to make these decisions yourself. It is very important to choose someone who is available and who would be comfortable making these types of decisions for you.
A Financial Power of Attorney will allow you to appoint someone you trust to make financial decision for you, such as paying your bills, managing your property and access your bank accounts.
A Revocable Living Trust can also be used for disability planning. By transferring your assets to a Trust, your trustee can access and manage the assets for your benefit.
Because all Revocable Living Trusts are not drafted the same, make sure your estate planning attorney includes language to take care of you and your assets if you become incapacitated. If you are in the process of drafting your estate plan, make sure your attorney includes a comprehensive incapacity or disability plan.
What Happens Without an Incapacity or Disability Plan?
If you become incapacitated and you do not have an Incapacity or Disability Plan in place, a court-imposed process called Guardianship or Conservatorship will be used to appoint a guardian or conservator for you. This means that state law and not someone you choose will decide how you should be taken care of and how your assets should be managed and spent.
If you want to protect your assets and family with an estate plan but don't know where to begin, then request a FREE copy of our Estate Planning E-Book and Newsletter and discover:
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How to create an estate plan to protect you and your family
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If you should be concerned about estate taxes
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The 4 basic requirements for a valid will
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7 important questions you should consider when making a will
- How to protect yourself and family if you become incapacitated or disabled
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The advantages and disadvantages of a trust
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Other estate planning tools everyone should know about
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