While the main purpose of an estate plan is to distribute assets to your loved ones after you are gone, it can also serve an important purpose while you are alive – planning for your potential incapacity. An estate plan can provide instructions for the management of your assets, payment of expenses, and personal instructions for your care if you become unable to communicate those decisions on your own.
Importance of Planning for Incapacity
Planning for incapacity is important for everyone, but it is especially important for unmarried partners. Typically, the spouse of an incapacitated person is named as the administrator for financial, legal, and medical needs. However, unmarried partners are not always named as the administrator, and a blood relative may be named instead.
It is also vitally important to have documents planning for incapacity if your plans differ than the wishes of your family members or if you have not shared what your final wishes are with your loved ones. If your choices are not clear, it is up to whoever is appointed to make decisions on your behalf, and whatever they decide regarding your care will be enforced.
Possible Incapacity Documents
There is multiple estate planning documents that can help you plan for any potential incapacity. These documents impact the financial, medical, and legal decisions that your appointed administrator can make.
Durable Power of Attorney
A durable power of attorney form appoints a person to make all financial decisions on your behalf. This includes paying all bills, house repairs or maintenance, and control over any retirement funds or other assets.
Revocable Living Trust
This estate planning tool is another form of protecting your assets in the case of incapacitation. Your assets are transferred into a revocable living trust and you are named as the trustee. If you ever become incapacitated, the successor trustee takes over until you are able to regain the ability to manage the trust. In addition, a revocable living trust can give instructions about asset management that a simple durable power of attorney cannot.
A healthcare proxy, otherwise known as a durable power of attorney for healthcare, appoints someone to make all of the medical decisions regarding your treatment and care. It applies to all medical decisions, including whether to leave you in a vegetative state, signing a “Do Not Resuscitate” form, or allowing you to pass away.
Also known as an advance directive, a living will gives directions to the person named as your healthcare proxy regarding your medical wishes. It can gives directions about what medication you wish to have, what treatments you want to abstain from, and detailing your end of life wishes. It can alleviate the trauma of making a loved one decide whether or not to end potential life-saving procedures. A living will should also include copies of HIPAA forms for all of your doctors and other medical professionals that give authorization to the person named in the healthcare proxy form.