When people think of “estate planning,” they tend to think about planning for death. However, a crucial aspect of estate planning is to plan for events that happen during life. Specifically, estate planners think about what happens if you become incapacitated.
“Incapacity” occurs when a person is unable to handle his or her own affairs. A person may be mentally incapacitated, such as in a coma. A person may also be physically incapacitated, such as in a wheelchair. Incapacity can occur at any age. When it does, it is best that there is a plan in place to avoid confusion, delay, and even family conflict when it comes to managing affairs. Two simple documents can help.
The first is the “health care proxy” document. This takes effect when a doctor has determined that you are mentally incapable of handling your own affairs. With the health care proxy, you appoint a person to “stand in your shoes” to make the medical decisions that you would make if you were able to do so. Many people use the health care proxy document to state their wishes about resuscitation and extraordinary measures. This document makes the medical process just a little bit easier for your family during very difficult times.
What about all the other aspects of your affairs, such as banking, paying bills, and managing property, business, and finances? To plan for these, consider executing a “power of attorney.” This document allows you to name an “attorney-in-fact” who may manage your affairs as your agent. The power of attorney is a bespoke document, and you should think it through carefully to make sure it is tailor-made for you. It can be very narrow, granting only specific powers—like the power to write a check. Or it can be very broad, granting the power to manage all of your personal and business affairs.
You should think very carefully about who you will appoint to be your attorney-in-fact; it should be someone you trust to carry out your wishes. The power of attorney can take immediate effect, or it can be written to take effect only upon your incapacity.
The power of attorney is not just to prepare for mental incapacity. It can be used by people who are able to make all of their own decisions but cannot physically carry out certain activities, such as attending a real estate closing or going to the bank.
The power of attorney is effective upon signing, so you should think carefully about storage and when to give it to your agent. It is a very powerful document, which is why it should be carefully drafted by a licensed attorney.
By planning for incapacity, you have taken a major step to avoid the potential for public, costly, and embarrassing court proceedings if there is ever a question about your mental competence down the road. Most importantly, you have provided your family with the assurance that a trusted person has been chosen to make medical decisions, pay the bills, manage the property, and keep your affairs in order.
Planning for incapacity must be done ahead of time. This may seem obvious, but it is very common for people to start thinking about this when it’s already too late. Once a person is incapacitated, he or she cannot sign a health care proxy or a power of attorney document. The ship has sailed. So as you think about estate planning, consider not only about planning for death but also planning for life. You and your loved ones will benefit if your affairs are handled expediently and according to your wishes.
ABOUT THE AUTHOR: Attorney Katie Manzi McDonough, Esq., (kmm@efclaw.com) is one of many talented planning and probate attorneys at Egan, Flanagan and Cohen She also has experience in corporate, business, and non-profit law.
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