Planning how your assets will be distributed after your death is something that most people think about, but planning for incapacity might be even more important. Providing your family with the ability to manage your finances and your health care decisions in the event of incapacity significantly reduces their stress and protects your assets.
Each state’s laws are slightly different, but the basics are the same throughout the country.
Durable Power of Attorney
A ‘general power of attorney’ is used to handle financial, business or personal matters, but its authority ends if you become incapacitated. A ‘durable’ power of attorney (POA) is essential for how to plan for incapacity. A durable POA designates somebody you choose to manage your financial and personal affairs if you become incapacitated.
When you put a durable power of attorney in place, you can choose a person that you know is reliable, trustworthy and capable. The person you select will be able to pay your bills, file your tax returns, sell your real estate and trade in your brokerage account.
In many states you can even empower your agent to support your family and make financial health care decisions on your behalf. If you don’t have a durable power of attorney in place and you become incapacitated, a court will appoint somebody. This is why it is always best to assign someone who has your best interest to manage your affairs.
A living will, also called an advanced directive, is a legal document that specifies the care you would like to receive if you become incapacitated. It can be very detailed about your wishes regarding life-sustaining measures such as feeding tubes and ventilators. The criteria that should be used to make the determination are also included. Knowing exactly what you want helps reduce some of the guilt and anxiety that family members face. This happens when they must make difficult life and death decisions on your behalf.
Health Care Proxy and HIPPA Authorization
Providing somebody you trust with a health care proxy and HIPPA authorization will enable them to manage your care. It will allow them to obtain your medical records and access your health insurance information. They can also speak to your doctors about your condition and inquire about your prescriptions.
Without a health care proxy and HIPPA authorization, your family members may have to petition a court for permission to act on your behalf. This can be troublesome if your incapacity is the result of an accident or acute illness. It can even cause a delay in treatment that might impact your recovery.
Last Will and Testament
If your incapacity is temporary, you can regain control of your finances, personal affairs and health care decisions. This happens once you regain your capacity to do so. Unfortunately, these situations are rare. Therefore, part of incapacity planning is having a Will in place that distributes your assets and names guardians for minors.
Not long ago, planning for incapacity required paying high hourly fees to expensive attorneys to create a will. With technology today, there are a few reputable free online Wills programs available. It’s easy to draft these documents without the help of a lawyer, since most are created by estate planning attorneys.
Some people will create a will online and then present that online will to an attorney for review. This is a sure way to be certain that you state all your needs and wishes . Once your Last Will is registered, (The U.S. Will Registry), you can rest assured that your family can locate it when needed.