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.
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Discover 5 easy ways to make sure your children, wishes and assets stay protected should something happen to you (including tips for incapacity or disability planning)
About Nicole K. White
After losing a close relative, Nicole witnessed the devastation, enormous expense and chaos caused by not having a simple estate plan. It is Nicole’s mission to educate parents, especially single parents, about protecting themselves, their families, minor children, and assets with comprehensive Estate Planning.