An important component of the estate planning process that should not be overlooked is planning for incapacity. A plan for incapacity will help the estate planner rest easy that their needs will be met and they will be cared for when they are unable to care for themselves.
Planning for financial incapacity
There are a couple of different documents to include in an estate plan to prepare for financial incapacity. A power of attorney for finances designates an agent to handle the estate planner’s financial affairs including playing their bills, making financial decisions for them, managing investments, filing tax returns, paying the mortgage or selling real estate and tending to other financial matters named in the document. A revocable living trust can also help estate planners who are financially incapacitated.
Planning for healthcare incapacity
A medical care power of attorney or living will can also protect the estate planner if they become incapacitated at some point and are unable to manage their healthcare for themselves. And advance medical directive or healthcare proxy gives a designated agent the authority to make healthcare decisions for the estate planner if they become incapacitated. In addition, a living will extends authority to the designated agent to make either life-sustaining or life-ending decisions if the estate planner becomes incapacitated.
Planning for incapacity is an essential part of the estate planning process. For that reason, estate planners need to be familiar with how they can plan for incapacity and the documents they should include.