It’s a difficult topic that many of us prefer to avoid: the possibility that one day, due to illness or injury, we may no longer be able to make important decisions for ourselves. However, planning for incapacity is just as critical as planning for death. While most people understand the importance of estate planning to ensure their wishes are carried out after they pass, fewer realize that planning for incapacity is equally essential to safeguard their future—and their well-being—during their lifetime.
Whether you’re in your 30s, 50s, or nearing retirement, it’s never too early to start planning for the unexpected. Incapacity can strike at any age—through a serious illness, accident, or other unforeseen event. By setting up the right documents and strategies in place today, you ensure that if you become unable to make decisions in the future, your wishes will still be honored and your loved ones won’t face unnecessary stress or uncertainty.
What is Incapacity Planning?
Incapacity planning is the process of ensuring that someone you trust is legally authorized to make decisions for you if you become unable to do so. This type of planning can help you avoid the possibility of a court-appointed guardian or conservator managing your affairs, which can be both costly and time-consuming.
It’s important to understand that incapacity planning is not just about financial decisions. It’s also about healthcare decisions, and ensuring that medical treatment aligns with your preferences, even if you can’t express them in the moment. Fortunately, there are several tools and legal documents that can help you plan for incapacity and ensure that both your personal and financial affairs are in order.
1. Durable Power of Attorney: Appointing Someone to Handle Your Financial Affairs
One of the most important documents in incapacity planning is a Durable Power of Attorney (DPOA). This legal document allows you to appoint someone—a trusted individual, such as a spouse, adult child, or close friend—to manage your financial and legal affairs if you become incapacitated. A DPOA can cover a broad range of decisions, from paying bills to managing investments, selling property, and even handling business matters.
The term “durable” is significant because it means the authority granted to your agent remains in effect even if you become incapacitated. Without a DPOA, your family members would need to petition a court for the authority to make financial decisions on your behalf, a process that can be both lengthy and costly.
2. Healthcare Directives: Ensuring Your Medical Wishes Are Followed
In addition to a DPOA, another essential component of incapacity planning is a Healthcare Directive, sometimes called a Living Will or Advance Directive. This document outlines your medical preferences, including what type of treatment you want—or don’t want—if you’re unable to communicate your wishes.
Healthcare directives typically include provisions for life support, organ donation, pain management, and other critical decisions. By specifying your preferences ahead of time, you prevent your family members from being placed in the difficult position of having to guess what you would have wanted. It also helps avoid family conflicts, ensuring everyone understands your wishes.
You’ll also want to designate a Healthcare Power of Attorney—a person you trust to make medical decisions on your behalf if you’re unable to make them yourself. This individual is empowered to work with doctors, ensure that your medical treatment aligns with your wishes, and make other healthcare decisions in your best interest. In most cases, a HIPAA Release will also be signed to allow your agent to speak with your treating physician and see your medical records if they are acting on your behalf. That way they can get past any medical records block and effectively advocate for you.
While you could piecemeal these items in separate forms, in modern practice we usually combine the medical power of attorney and guidance on wishes into one document called an Advance Health Care Directive, and the named agent will be given access to medical records in a separate HIPAA Release.
3. Living Trusts: Preparing for Incapacity and Beyond
While durable powers of attorney and healthcare directives address immediate decision-making, Living Trusts can also play a critical role in incapacity planning. If you are the trustee of your own living trust and become incapacitated, a successor trustee—someone you’ve appointed—can step in and manage the trust without going through the court process.
A living trust offers an extra layer of protection for your financial assets and helps to avoid the potential delays and expenses of probate, should you be unable to manage your estate or property during your lifetime. The flexibility of a living trust ensures that your assets are managed according to your instructions, even if you’re temporarily or permanently unable to handle them yourself.
Living Trusts can also be a very powerful tool to protect against elder fraud and abuse, and will usually provide much more options in planning than a financial power of attorney alone. For example, you can carve out a private determination of incapacity within your Living Trust that allows those you trust the most to determine your incapacity instead of your doctor alone. This can be extremely helpful in those gray area cases or at the onset of a diagnosis where the physician may not be ready to determine you incapacitated but on your “bad days” you are writing massive checks to online scammers. You can also have provisions in your trust that grant you a standby co-pilot in managing your affairs – they don’t do anything day to day and you keep all the control, but they are there just in case you need them and they do not have any hoops to jump through to begin advocating for you.
With the right setup in your trust, your family (or those you’ve pre-appointed) can step in to safeguard the trust for your benefit in these sorts of events and avoid the heartache that comes all too often when our elderly or at risk populations fall victim to scammers. You can also ensure there is zero downtime or obstacles to assisting you should the need ever arise.
4. Benefits of Early Incapacity Planning
You might be wondering: “Why plan for incapacity now, when it could be years before I need it?” The truth is, the earlier you prepare, the better. Planning for incapacity is about peace of mind—yours and your loved ones’. It gives you control over how and by whom decisions are made if you are unable to make them for yourself.
- Avoiding family conflict: Family members can disagree on what to do if you are incapacitated, leading to confusion, stress, and potential conflict. By naming a trusted person to manage your affairs, you eliminate uncertainty.
- Preventing court involvement: Without a durable power of attorney or healthcare directive in place, your family might need to petition the court for guardianship or conservatorship, a process that can be costly and take a long time to complete.
- Preserving your legacy: Just as you would protect your assets for future generations through estate planning, incapacity planning ensures that your life’s work and personal assets are managed in a way that reflects your values and priorities.
Plan For Incapacity Before It’s Too Late
While many people delay incapacity planning until later in life, there is a threshold that eventually gets crossed where you cannot plan any longer and we must look to the Courts to determine your fate. In every case, it is far better for you to make your wishes known well before this time to avoid any confusion, fighting, or unnecessary expenses.
Whether you’re just beginning your estate planning journey or looking to revise your current plan, addressing incapacity is a crucial part of securing your future. Even if you’re not in immediate need of healthcare directives or a durable power of attorney, setting up these documents now will make your future—and your family’s future—much easier to navigate.
At Jenkins & Jenkins Estate Planning Attorneys, we understand the complexities and importance of incapacity planning. Our experienced team can help you create a customized plan that protects your assets, ensures your healthcare wishes are followed, and provides peace of mind for you and your loved ones. Contact us today!
