Why Is Incapacity Planning Important? The Law Office of Paul Black can answer your questions regarding this matter and more. Contact us for a consultation!
Author: Paul Black
Paul’s experience as the son of two parents with big health challenges is what led him to the work he does today and gives him first-hand knowledge of the challenges that many caregivers and family members face. After graduation from GSU Law, Paul was chosen from dozens of applicants nationwide as one of three 2010-2011 Borchard Foundation Law & Aging Fellows. Paul has been named as a SuperLawyers “Rising Star” in the area of Estate Planning and as a member of Georgia’s “Legal Elite” by Georgia Trend magazine. Published on: January 19, 2023.
What Is Incapacity Planning?
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If you’re worried about what could become of you or your loved ones and dependants if you fall ill and become incapable of making decisions, you might want to consider incapacity planning.
Incapacity planning is a process that entails the preparation of legal documents or legal mandates that authorize specific persons to handle your healthcare and financial decisions in case you become incapacitated in the future.
It is an important aspect of estate planning that helps you protect yourself, your spouse, and your dependents by setting up a system of decision-making to operate when you’re unavailable due to your physical/mental incapacity.
It is a great way to proactively take charge of what happens to you if you suddenly become incapacitated due to sickness or an accident. You can ensure your wishes are carried out to the letter by preparing an incapacity plan to take care of such contingencies.
Read on for more reasons why you need to consider having an incapacity plan and how an estate planning attorney can help you get started.
How Does Incapacity Planning Work?
Incapacity planning consists of the proactive measures you can take to prepare for temporary or permanent incapacity. It allows you to create a system of instructions other than a last will and testament to help deal with end-of-life scenarios or periods of medical incapacity. It is an aspect of risk management in estate planning that allows you to prepare for and resolve any unforeseen issues that could arise during your period of incapacitation.
Planning for your future is vital to prevent family members or the state from making disastrous decisions involving you. Upon application by your family members, a judge can intervene to select a court-appointed guardian to take control of your assets and make personal and medical decisions for you. At that point, you’ll have no say about what becomes of you and your finances even though you’re still alive.
So, it is important that you take steps to prevent such issues by stating your wishes expressly beforehand.
When to Begin Incapacity Planning
For most people, incapacity planning becomes a major consideration in the following circumstances:
Long-term or terminal illness: Persons diagnosed with Alzheimer’s disease, cancer, or other terminal illnesses that involve a slow deterioration of their mental facilities are often prompted by their diagnosis to begin estate planning as fast as possible.
A life-changing event like divorce or loss of a spouse: Divorce or the death of a spouse can prompt incapacity planning. Such situations may result in a reassessment of assets and personal plans.
Loss of a family member: Witnessing a loved one become incapacitated while their finances are poorly managed has also led many people to think about incapacity planning to secure their future.
You don’t have to wait until any of the above happens to you, as one can never be too certain about their health. Accidents can happen anytime, so it is better to take steps immediately and state your instructions to take care of any eventualities.
You can speak with a skilled incapacity planning lawyer to ensure that you have the appropriate documents in place.
Legal Documents For Incapacity Planning
An incapacity plan is made of several legal documents that clarify the maker’s wishes on specific issues, including who can make decisions about health care, who has access to finances, and who can take charge of their minor children pending their recovery.
These documents help to eliminate any form of guesswork regarding the handling of your affairs and may include the following:
Financial Power of Attorney
This document allows you to appoint an agent (also referred to as an attorney-in-fact) to take charge of your finances or business activities.
By choosing a trusted person to manage your assets and financial affairs, you can be confident that your finances will be managed properly while you’re incapacitated.
Financial powers of attorney are valid once signed and take effect once you have been diagnosed to be mentally incapacitated or upon any other occurrence that you specify in the document.
You can give the appointed attorney power to perform several functions, including:
Pay your bills
File tax returns
Manage other financial needs as stipulated in the document
Revocable Living Trust
A revocable living trust ensures that your assets are adequately managed while you cannot handle them yourself. The legal document creates a trust (as a legal entity) and allows you to transfer ownership of your assets to it.
You can still manage these transferred assets during your lifetime as long as you’re capable. You can also appoint a third party to manage the assets on your behalf once you become incapacitated.
Generally, a living trust involves three parties:
You: the individual creating the trust plan, also called the grantor/ trust-maker/ settlor.
The trustee: The person who manages the transferred assets. A trustee is usually a trusted person nominated by the trust-maker.
The beneficiaries: The individuals who benefit from the trust property and include your loved ones, dependents, or anyone else you’d like to cater to.
The document is also known as an advanced healthcare directive. The healthcare directive stipulates your wishes should you become incapacitated or incapable of giving informed consent about your medical treatment.
The more detailed your living will is, the easier it will be for your family members to understand your wishes. This document could also integrate a medical power of attorney in its contents to ensure medical and healthcare decisions are made as per your wishes.
Medical Power of Attorney
The document is also termed a healthcare proxy. A medical power of attorney allows you to select someone to act as your agent (decision-maker), coordinating your medical care needs if you become incapacitated. The healthcare proxy plan lets your care providers honor your care needs and wishes in case of a medical emergency.
The Health Insurance Portability and Accountability Act (HIPAA) is a federal law that mandates ‘covered entities,’ including nursing homes, doctors, nurses, and insurance companies, to protect your privacy and your medical information.
This means these entities cannot divulge your medical history to anyone without your consent. While this is a good thing in normal circumstances, it could pose problems for your health if your loved ones need to access your health records while you’re incapacitated and unable to give consent.
The HIPAA authorization document allows you to waive your right to privacy by allowing healthcare professionals, hospitals, or treatment facilities to disclose your private healthcare information to your family in specific circumstances. Without HIPAA authorization, your family members can’t intervene in making decisions about your medical needs or access medical records.
How an Estate Planning Attorney Can Help
There are a lot of legal aspects to incapacity planning, so you would likely benefit from working with an estate planning attorney to create your plan.
Your attorney can advise you, assess your case, and develop an incapacity plan that meets your needs, either independently or as part of your general estate plan.
Your attorney can also ensure that the incapacity document(s) you choose to utilize complies with the legal requirements for validity. This way, you can be sure that your plan can be carried out without impediments.
Contact the Law Office of Paul Black for Help With Your Incapacity Plan
Our team at The Law Office of Paul Black can assist you with setting up an incapacity plan or answering any questions you have about the process.
We are a reputable estate planning and elder law firm in Georgia. We are dedicated to helping our clients achieve peace of mind by providing legal solutions to convey their plans and wishes.
If you need assistance with estate planning or incapacity planning, please feel free to contact our office. We look forward to hearing from you!