Health Care & Planning for Incapacity

Incapacity Planning, also referred to as life planning, is planning for the unfortunate circumstance of becoming unable to control your finances or health decisions. This could be brought on by a car accident, illness, or old age. If you don’t plan for your incapacity, you run the risk of the courts interfering and acting inconsistently with your intended desires.

The two major realms of incapacity planning are control over finances and control of health decisions. There are legal documents that can be executed to give that control to specific person(s) whom you feel would make the best decisions on your behalf. Making your own choices is always better than surrendering your decisions to a court who has never met you.

If you become mentally incapacitated, you won’t be able to manage your own financial affairs. Many are under the mistaken impression that their spouse or adult children can automatically take over for them in case they become incapacitated. The truth is that for others to be able to manage your finances, they must petition a court to declare you legally incompetent.

This process can be lengthy, costly and stressful. Even if the court appoints the person you would have chosen, they may have to come back to the court every year and show how they are spending and investing the money.

If you want your family to be able to immediately take over for you, you must designate a person or persons that you trust in proper legal documents so that they will have the authority to withdraw money from your accounts, pay bills, take distributions from your IRAs, sell stocks, and refinance your home.

Keep in mind that a Will does not take effect until you die and a Power of Attorney may be insufficient.

In addition to planning for the financial aspect of your affairs during incapacity, you should establish a plan for your medical care.

The law allows you to appoint someone you trust – for example, a family member or close friend to make decisions on your behalf about medical treatment options if you lose the ability to decide for yourself.

You can do this by using a Durable Power of Attorney for Health Care where you designate the person to make such decisions. In addition to a Power of Attorney for Health care, you should also have a Living Will which informs others of your preferred medical treatments such as the use of extraordinary measures should you become permanently unconscious or terminally ill.

As time passes by and your life changes, your incapacity plan will become stale and outdated. It is important for you to have your incapacity plan reviewed every few years or after a major life event (such as a divorce or a death) to ensure that the plan will work the way you intend it to work if it is ever needed.