How Do I Plan for Possible Incapacity During My Lifetime? What Estate Planning Documents Are Necessary?

There are several estate planning documents that we prepare for our clients to anticipate some form of incapacity, including:

• Healthcare powers of attorney
• Durable powers of attorney, and
• Trusts.

Healthcare powers of attorney are distinguishable from durable financial powers of attorney, in that they are limited to only the scope of making healthcare decisions for a person when that person is incapable of communicating their desires regarding their healthcare on their own. If they can blink their eyes, nod their head, or write on a chalkboard what it is they would like, then the power of attorney instrument for healthcare doesn’t become effective. However, if they are in an accident and they’re unconscious, or under general anesthesia for a procedure, a healthcare power of attorney will help facilitate access to important information, such as,

• Medical records,
• Insurance information, or
• Pharmacy records.

With a healthcare power of attorney in place, as well as a signed Health Insurance Portability and Accountability Act (HIPPA) release, or release for medical information, family members will have access to this important information needed to make healthcare decisions for you.

Another instrument that we use to anticipate an incapacity is durable powers of attorney for financial matters. This isn’t a document that’s strictly limited to financial matters because it is extremely broad. You must be very careful in who you choose to be your agent under a power of attorney because that person will have the authority during your incapacity, and sometimes even when you can manage your own assets, to make financial decisions in your name. This is a powerful instrument; however, it is a necessity for everyone to have a durable financial power of attorney to let a spouse or child be able to control assets while you’re incapacitated.

A trust is another excellent example of an instrument that can be used to prepare for incapacity. They facilitate a smooth transition of control of assets. The incapacitated spouse may serve as the trustee of their own trust, up until the point they become incapacitated. They can name a successor trustee, perhaps their spouse, child, or corporate fiduciary, like a bank trust department.

There needs to be somebody serving as a trustee of the trust beyond the incapacity. At that point, there’s no need to transfer or retitle assets.
The power of attorney instrument provides a vehicle by which there is a vested authority in the agent, under that power of attorney, to transfer the incapacitated individual’s assets into their trust. This is how a power of attorney and a trust agreement can interact with one another to reach positive results for protecting and managing assets for an incapacitated person.

For more information on Estate Planning Law in North Carolina, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (704) 248-6325 today.