Planning for incapacity is something we all should do at some point. Doing so ensures that when you are no longer able to make decisions for yourself, there are structures and instructions in place so that legal, financial, and personal matters are handled dealt with properly.
In terms of legal documents, two are worth mentioning: a durable power for attorney financial affairs and an advance health care directive for medical decision-making. Powers of attorney are very important documents which name an agent to be responsible for making decisions. In setting up a power of attorney one can limit the scope of their authority and establish when the instrument takes effect. It is important to select an agent you trust, because the authority they wield with a power of attorney is great.
Advance health care directives, in Georgia, allow folks to name an agent for medical decision-making, as well as identify their preferences for medical treatment in different circumstances. These documents can help prevent confusion over medical decisions for family members of an incapacitated loved one.
Another way to plan for incapacity is to make sure you are covered with disability insurance. This may not seem like an aspect of estate planning, but having insurance for disability can prevent the loss of wealth that inevitably occurs when one is unable to continue working as usual.
For married couples, it is important that each partner has a basic understanding the couple’s financial plan. If one spouse is unable to make decisions due to incapacity, the other should be able to step in and handle things, or at least to know when to ask for help.
Incapacity planning is not hard when one works with an experienced attorney, a financial advisor, and other professionals. The key is to begin the process sooner rather than later.
Source: Accounting Web, “Why Everyone Needs an ‘Incapacity Plan’,” Terri Eyden, August 5, 2013.