Estate planning isn’t only for people at an advanced age or with a terminal illness. Creating a valid and legally enforceable estate plan can protect a person if they become incapacitated.
If you’re incapacitated, you can’t make informed decisions regarding your well-being and finances. Incapacity often results from a debilitating injury, sudden illness, or traumatic accident. If you don’t include an incapacity plan in your estate plan, a judge has the authority to appoint someone to manage your affairs. That means someone you don’t want to have access to your medical or financial documents could have total control over various aspects of your life.
You’re in a vulnerable position if you can’t speak for yourself. You won’t be able to direct your medical team on the type of treatment you want or access your own bank account to manage your business or finances. You can protect yourself, your assets, and your future by executing the appropriate documents before they’re required.
Managing Your Finances with an Incapacity Plan
You could prevent issues with your finances by creating the following documents for your estate plan. Both could offer valuable protections in the event of your incapacitation.
Financial Power of Attorney
A financial power of attorney (POA) is a legal document that authorizes a specific individual to manage someone’s assets and financial affairs. The person you appoint is called an attorney-in-fact. Granting them legal authority in a POA allows them to file tax returns, pay bills, and complete other necessary financial transactions on your behalf when you cannot do so yourself.
Multiple types of financial POAs exist. The one you choose will depend on your circumstances and needs. The most common include:
- Durable Financial POA – A durable financial power of attorney goes into effect once you sign it. It gives your chosen attorney-in-fact the ability to make financial decisions for you.
- Limited Financial POA – You can create a limited power of attorney, so your designated attorney-in-fact has limited control over specified matters. They could handle affairs, such as real estate sales and business transactions.
- Springing Financial POA – A springing power of attorney becomes effective once a medical provider determines you are mentally incompetent or physically incapacitated. Once that happens, your attorney-in-fact can proceed with their responsibilities.
Revocable Living Trust
A revocable living trust is another essential part of incapacity planning. You are the trustee from the moment you execute the document.
However, you can name a successor trustee to step in and manage your assets if incapacitation prevents you from handling your own affairs. Creating a revocable living trust can protect your assets if a sudden illness or medical emergency leaves you in a state where you can’t speak for yourself.
Managing Your Healthcare with an Incapacity Plan
Incapacity planning should also include a plan for your medical treatment if you become incapacitated. You must create various documents to ensure the person you choose can legally direct your doctors in accordance with your wishes.
A healthcare directive grants your chosen agent the authority to make critical medical decisions on your behalf. The person you pick must understand what you want and be willing to communicate with your healthcare professionals.
They can instruct your medical team on whether you want resuscitation, a feeding tube, and other life-saving measures. They can also advise healthcare providers about your preferences regarding the type of treatment you want in specific situations, medications you would rather avoid, and end-of-life care.
A Health Insurance Portability and Accountability Act (HIPAA) authorization gives a designated individual the right to access someone’s medical records. You should complete one and decide who you want your medical providers to release your private healthcare information to if you become incapacitated.
The person you pick will be able to request copies of your medical records so they can discuss treatment with your doctors. They can also talk to your insurance provider about coverage and other information.
Telpner Peterson Law Firm, LLP, has represented clients in Council Bluffs, IA, since 1952. We have over 100 years of combined experience in estate planning law. When you hire us, we will learn about your needs and create the legal documents necessary to protect your interests.
Call us at 712-309-3738 today for your confidential consultation with a Council Bluffs estate planning lawyer to learn more about incapacity planning.