Advance Planning for Diminished Capacity
We all know someone who was smart and capable and then, maybe as a result of dementia or an accident, became incapacitated. It’s a frightening thing to consider, but advance planning can help you and your loved ones.
The good news is that we are living longer. However, many of us will experience a time at some point in our lives, when we are not able to take care of ourselves. We think of this more as a problem of the elderly, but there are young and healthy people who also become suddenly incapacitated. The best protection for you and your family is to have a plan in place, long before anything occurs.
Forbes’s recent article, “Protect Yourself Against Diminished Capacity,” reminds us that incapacity can be either mental or physical, and it can be for a short time or permanent.
Based on your financial situation, health, and age, long term health care and/or disability insurance might be a wise strategy. That’s because you can insure against loss of income and the direct costs of assisted living arrangements. In addition, there are some legal documents that can prevent many problems for your family, care givers, and yourself. Let’s review some of these:
If you have properties, business interests, and investment accounts, holding them in a revocable living trust gives you several benefits. Most people want to be the sole trustee (decision maker), as long as they’re able to do so. Until and unless you’re unable to act for yourself, you control the assets and retain all powers to act. In the event you’re not able to act for yourself, a trust will designate a contingent trustee to act on your behalf, until you can resume the management of your affairs. You can decide the circumstances in which a successor trustee would take control and the powers they’d have to act on your behalf.
Other legal documents you should have in place include a financial power of attorney and healthcare directives. A financial power of attorney allows the agents named therein to make decisions on your behalf regarding checking accounts, savings accounts, your home or personal property, and also allows them to perform many other financial transactions on your behalf. Without a financial power of attorney in place, a love one is required to have you declared incapacitated by a court in order to step into your financial shoes and manage your affairs. Healthcare directives, including a healthcare power of attorney, living will, and HIPPA authorization, aren’t only for end-of-life situations. They can be used if you suffer an accident or illness that leaves you unable to give or withhold informed consent. Your healthcare directives allows the specified agents to make medical decisions on your behalf, especially if those individuals you have chosen are not your immediate family members.
Every state has its own requirements for these legal documents, so working with an experienced estate planning attorney in your state to create a plan is critical in that process. Here at the Soto Law Firm we will assist you to create a personalized approach that works best for your situation. The goal is to have these documents in place, before anything unexpected occurs. Call us today for a free consultation.
Reference: Forbes (August 9, 2018) “Protect Yourself Against Diminished Capacity”
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