How to Plan for Incapacity: Legal Tools You Need
Planning for incapacity is a crucial aspect of estate planning that too many people overlook. While many individuals focus on distributing their assets after death, it’s just as important to have a plan in place for situations where you might become incapacitated—whether due to illness, injury, or aging.
Incapacity can leave individuals unable to make their own decisions or manage their personal, medical, and financial matters. To avoid confusion or conflict when that time comes, it's necessary to address incapacity in advance through proper legal tools. Goldstein Mauer PLLC can help clients in New York City through the estate planning process.
The Importance of a Power of Attorney
One of the most important documents in planning for incapacity is a power of attorney (POA). This legal tool allows you to designate someone you trust to handle your affairs should you become incapacitated. There are two main types of powers of attorney—financial and medical—each serving a distinct function.
A financial power of attorney grants the designated person, often called an "agent" or "attorney-in-fact," the authority to make financial decisions on your behalf. This might include managing bank accounts, paying bills, filing taxes, and even managing investments.
Without a financial POA in place, if you become incapacitated, someone may need to petition the court to become your legal guardian or conservator, which can be time-consuming and costly.
On the other hand, a medical power of attorney lets you designate someone to make medical decisions for you if you're unable to communicate your wishes. This document can help make sure that your healthcare decisions are made according to your preferences, without the need for family members to engage in potentially difficult disputes.
Both financial and medical powers of attorney can be set up to take effect immediately or only if you become incapacitated. When considering who to choose for these roles, it’s important to select individuals who are not only trustworthy but also capable of handling the responsibilities that will fall upon them.
Expressing Your Medical Wishes With a Living Will
Another essential tool in incapacity planning is a living will, also known as an advance healthcare directive. Unlike a power of attorney, a living will specifies your wishes regarding medical treatments and interventions in the event that you can’t communicate these decisions yourself.
It can address a wide range of healthcare issues, from decisions about life-sustaining treatments to the use of pain medication or organ donation. A living will is particularly crucial when it comes to end-of-life decisions.
If you're incapacitated and facing a terminal illness, for example, a living will can outline your preference for whether to receive treatments like mechanical ventilation or feeding tubes. This can provide guidance for doctors and family members, making sure your wishes are followed and helping to prevent confusion or disagreements during an already difficult time.
While a living will addresses your healthcare preferences, it doesn’t appoint someone to make decisions on your behalf. For that purpose, you would still need a medical power of attorney, which can work together with your living will to cover all aspects of your healthcare needs.
Protecting Assets and Controlling Distribution With a Revocable Trust
A revocable living trust is an important estate planning tool that can also help address the possibility of incapacity. While a trust is often used to manage assets after death, it can also provide a way to manage your affairs during your lifetime if you become incapacitated.
A revocable living trust allows you to place assets into a trust and appoint a trustee to manage those assets on your behalf. If you become incapacitated, your appointed trustee can step in and continue to manage your financial affairs without the need for a court-appointed guardian or conservator.
The flexibility of a revocable trust is one of its key benefits—it can be modified or revoked at any time while you’re still capable of managing your own affairs. Additionally, a successor trustee can be designated to take over when the original trustee is no longer able or willing to perform their duties.
This tool can complement a financial power of attorney, but it provides additional control and continuity, especially for more complicated financial matters. It can also help avoid the probate process upon your death, as assets in the trust pass directly to your beneficiaries.
What Happens if There’s No Plan?
If you don’t put the proper tools in place with estate planning and you become incapacitated, your loved ones might have to go through a legal process to appoint a guardian or conservator. This can be a time-consuming and potentially contentious process, particularly if there’s disagreement about who should take on the role.
A guardian is someone appointed by the court to make personal and medical decisions on behalf of an incapacitated person. A conservator, on the other hand, is responsible for managing the financial affairs of someone who’s unable to do so themselves.
The court process for appointing a guardian or conservator can be both expensive and invasive, requiring a judge to evaluate the situation and determine who is best suited to take over these responsibilities. One of the key advantages of having an estate plan in place is that it prevents the need for guardianship or conservatorship proceedings.
By establishing powers of attorney and a living trust, for example, you can give someone you trust the ability to manage your affairs without involving the court. These arrangements help make sure that your personal and financial matters are handled in accordance with your wishes.
Designating a Decision-Maker
A health care proxy is a specific type of medical power of attorney that designates someone to make healthcare decisions on your behalf if you’re incapacitated and unable to communicate.
Some important factors to keep in mind when selecting a health care proxy include:
Understanding of your medical preferences: The person you choose should be someone who knows your values and medical preferences in detail. This makes sure that they can make informed decisions on your behalf when you're unable to communicate.
Willingness to advocate for you: It’s crucial that your proxy is willing to act in your best interest, even in challenging situations.
Ability to make tough decisions: Your proxy should be capable of handling emotionally difficult decisions with clarity and resolve.
Trustworthiness and reliability: Choose someone who will be available and able to act on your behalf at any time.
Selecting a trusted person for this role is vital, as the proxy may be called upon to make life-or-death decisions during times of emotional strain. It’s essential that the person you select understands your values and is willing to advocate for your well-being even in difficult situations.
Understanding the scope of the health care proxy is just one part of managing your health care decisions. Protecting your health information and making sure it’s shared only with trusted individuals is another critical aspect. This brings us to the importance of protecting your health information.
Protecting Your Health Information With HIPAA Authorization
When planning for incapacity, it’s also important to consider the handling of your medical information. Under the Health Insurance Portability and Accountability Act (HIPAA), healthcare providers are generally prohibited from sharing your health information with others without your consent.
However, if you become incapacitated, your designated medical decision-maker may need access to this information in order to make informed decisions on your behalf.
A HIPAA authorization allows you to grant permission for specific individuals—such as your medical power of attorney or health care proxy—to access your health records and communicate with your healthcare providers. Without this authorization, your loved ones may encounter difficulty in obtaining the information needed to make critical decisions about your care.
While this document is often overlooked, it’s essential for making sure that the individuals you’ve designated to make medical decisions on your behalf have the necessary information to do so effectively.
Take Action Before It’s Too Late
By addressing incapacity in advance, you relieve your family of the difficult burden of making those decisions during a crisis, while also making sure your preferences are honored.
It’s never too early to start estate planning, and the more proactive you’re about addressing the possibility of incapacity, the better prepared you’ll be for whatever the future may hold.
We provide legal services to the New York City metro area, including the five boroughs (Manhattan, Brooklyn, Queens, the Bronx, and Staten Island), Long Island, Westchester County, and Rockland County. Call Goldstein Mauer PLLC to get connected with the tools you need to plan for the unknown with estate planning.
