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Facing the Possibility of Incapacity

Incapacity means that you are temporarily or permanently unable to take care of yourself or your day‐ to‐day affairs. Incapacity can result from serious physical injury, mental or physical illness, advancing age, and alcohol or drug abuse. Incapacity can strike anyone at anytime. Planning ahead can ensure that your wishes are carried out .

Plan Ahead

Designating one or more individuals to act on your behalf can help ensure that your wishes are carried out should you become incapacitated. Otherwise, a relative or friend must ask the court to appoint a guardian for you, a public procedure that can be emotionally draining, time consuming, and expensive. An attorney can help you prepare the necessary legal documents that will give individuals you trust the authority to manage your affairs. Consider putting in place at least one of the following options to help protect yourself should you become incapacitated.

Living Will

If you do not authorize someone to make medical decisions for you, medical care providers must prolong your life using artificial means, if necessary.  A living will allows you to approve or decline certain types of medical care, even if you will die as a result of the choice. Generally, one can be used only to decline medical treatment that “serves only to postpone the moment of death.”

Living Trust

You can transfer ownership of your property to a revocable living trust. You name yourself as trustee and retain complete control over your affairs as long as you retain capacity. If you become incapacitated, your successor trustee (the person you named to run the trust if you can’t) automatically steps in and takes over the management of your property. A living trust can survive your death, but it can be expensive to maintain and administer.

Power of Attorney

When you are ill or incapacitated — either for the short- or long-term — you’ll need someone to pay your bills, make investment decisions and handle other financial matters. There are several types of financial powers of attorney to consider:

  • general power of attorneyis comprehensive and gives your authorized individual broad powers to act on your behalf, including managing all your financial transactions, signing documents, and any other financial duties you specify. General power of attorney can remain effective until you pass away, but in most states, it will automatically end if you become incapacitated.
  • durable power of attorney serves the same function as a general power of attorney, but it remains effective even after you become incapacitated. It allows you to authorize someone else to act on your behalf. There are two types of DPOAs: an immediate DPOA, which is effective immediately, and a springing DPOA, which is not effective until you have become incapacitated. A DPOA should be fairly simple and inexpensive to implement. It also ends at your death. A springing DPOA is not permitted in some states, so you’ll want to check with an attorney.
  • limited power of attorneyis usually assigned for a specific purpose and time period. It’s often used when you can’t handle certain affairs due to other commitments or short-term illness.

Being proactive in life is a good thing — especially if you’ve taken the time to prepare a will or trust to reflect how you want personal and financial matters handled after death. Planning for who makes financial and medical decisions for you if you become disabled or incapacitated is just as important as planning for after you’re gone. This is where important estate planning documents like a power of attorney and a living will should be considered.

 

Q & A with Local Attorney Mark Fry

When kids go to college and/or turn 18, nobody is obligated to speak to parents/ care givers about the student’s state of affairs should the student become incapacitated.  A POA indicates persons who should be in the loop and who are able to make decisions on behalf of the student if they become incapacitated.  Local Baton Rouge Attorney Mark Fry answered a few questions for us on what parents of colleges students should consider before they send their children off.

Facing Incapacity Q & A

SOURCE: “Facing the Possibility of Incapacity.”  Raymond James, 31 Oct. 2012, pp. 1–4.
Raymond James and its advisors do not offer tax or legal services. Please discuss these matters with the appropriate professional. Any opinions are those of Mark Fry and not necessarily those of RJSF or Raymond James. Mark Fry is not affiliated with Raymond James

 

Posted December 5, 2017 in Planning Press Releases