Estate planning should always involve preparing for both the expected and the unexpected. A well-crafted estate plan should address the possibility of becoming mentally or physically incapacitated and being unable to make independent decisions on your own. This element of an estate plan is known as “incapacity planning.” Although many people mistakenly believe that incapacity is something only seniors or the elderly need to worry about, planning for the possibility of losing your capacity is important at any stage of life. After all, a sudden injury or illness can occur when you are still young and in good health.
The legal team at Harrison Law, PLLC understands how unsettling and frightening it may be to think that one day you may become unable to act independently. Our compassionate attorneys are highly experienced in helping individuals and families prepare for unforeseen circumstances and ensure that their plan for incapacity complements their overall estate plan. Call (480) 320-2310 to schedule a consultation or a face-to-face meeting with a seasoned estate planning attorney at Harrison Law, PLLC.
What Is Incapacity Planning?
Heightened medical concerns and the likelihood of health complications are unfortunate realities of aging. However, the future is uncertain for individuals of any age, and tragic events may happen when you least expect them. As a critical component of an effective estate plan, a plan for incapacity consists of several legal documents that help take precautionary measures and address the possibility of losing your mental or physical capacity. Without this piece of an estate plan in place, your loved ones may not be able to make crucial decisions about your health and finances in the event you are no longer able to act or speak for yourself. In a sense, an incapacity plan can be one of the greatest gifts to your family if something unexpected happens to you leaving you unable to make decisions on your own behalf.
Documents Needed for Incapacity Planning
Broadly speaking, documents for an incapacity plan are divided into two categories: documents for managing an incapacitated person’s finances and documents for making healthcare decisions on behalf of the incapacitated person.
Documents for Managing Finances
There are two fundamental documents that must be in place prior to a person losing the ability to make decisions on their own behalf in order to ensure that a person they trust can lawfully manage their finances:
- Financial power of attorney (POA). The person you choose as your “agent” under the financial power of attorney will have the authority to manage your finances and carry out all (or selected) finance-related tasks, such as filing taxes, paying bills, signing papers for you, selling or gifting real estate, and others. Financial POA can be general or limited. While general POAs give the broadest powers, limited POAs are restricted to specific tasks.
- Living trust. Living trusts are made between three parties: the trustor (the person who creates the document), the trustee (the person or entity who has the authority to manage the assets transferred to the trust), and the beneficiary (the person or entity who benefits from the trust). In the event of the trustor’s incapacity, the trustee will take control of the trust asset(s) and carry out the directions of the trustor. Under Arizona law, an individual trustee cannot be the beneficiary of the trust (ARS § 14-10402).
Documents for Making Healthcare Decisions
If you want to ensure that your loved ones can make healthcare decisions on your behalf if you become unable to communicate your wishes on your own, you might want to consider making the following documents part of your incapacity planning:
- Medical power of attorney. With this document, you appoint someone as your agent to make healthcare decisions for you if you can no longer make such decisions yourself due to incapacity. A medical POA can include provisions for a variety of medical actions, including decisions on medical treatment, personal care management, medication, and more.
- Living will. This legal document allows you to outline your wishes regarding end-of-life care and the use of life-sustaining medical treatment. Having a living will as part of your incapacity plan is essential to shield your loved ones from having to make tough decisions about your care and eliminate unnecessary conflicts in the family.
- HIPAA authorization. In Arizona, the information contained in a patient’s medical records is confidential and cannot be disclosed to third parties without the patient’s written consent (ARS § 12-2292). With HIPAA authorization, you give healthcare providers the authority to disclose your medical information to the person selected by you.
As time goes by, your wishes spelled out in the financial or medical documents in your incapacity plan may change. That is why it is essential to review your incapacity planning documents periodically to ensure that the plan will work the way you intend it to work. The experienced and dedicated estate planning legal team at Harrison Law, PLLC, can help you establish a well-rounded estate plan and update it when necessary to ensure that your documents align with your current situation.
Frequently Asked Questions (FAQs) About Planning for Incapacity
The FAQ section below is intended to answer some of the questions that may arise if you want to understand more about incapacity planning and how to approach it the right way.
When is the right time to start working on an incapacity plan?
While it is never too early or too late to start developing a plan for incapacity, keep in mind that you will not be able to put the necessary documents in place once you become incapacitated. Incapacity is not something that only happens to the elderly. Any of us can lose capacity at any moment, which is why planning for incapacity should be done as soon as possible.
Who determines that I am incapacitated?
It is the court that has the authority to make decisions to declare someone legally incapacitated after subjecting an individual to a series of tests and evaluations designed to test their physical and mental capacity.
What should an incapacity plan cover?
While everyone’s situation is unique, you should ensure that your incapacity plan be as detailed and specific as possible. Consider creating financial documents, including a financial POA and living trust, as well as medical documents, including a medical POA, living will, and HIPAA authorization to make your plan as comprehensive as possible.
Get Started with Incapacity Planning Today
The team at Harrison Law, PLLC, understands that incapacity planning is a sensitive matter that should be addressed with efficiency and compassion. If you lose your mental or physical capacity without a plan in place, your loved ones may be left in a position where they have to make difficult decisions without knowing your wishes. By working with an experienced attorney, you can craft a legally sound and effective incapacity plan that will put your mind at ease and ease the burdens placed on your loved ones. Contact Harrison Law, PLLC, and schedule a consultation to discuss how to get started with your plan. Call (480) 320-2310 today.
© 2024 Matthew W. Harrison and Harrison Law, PLLC All Rights Reserved
This website and article have been prepared by Harrison Law, PLLC for informational purposes only and does not, and is not intended to, constitute legal or financial advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.
