When you are younger it can be hard to envision a time when your mental faculties could become diminished. There is also the possibility of physical incapacitation later in your life.
However, it is important to prepare for the eventualities of aging. When you are planning your estate you should include an incapacity planning component.
Isn’t It Very Unlikely?
Everyone knows that incapacitation exists. However, you may be among those who are under the impression that it is very unlikely that you will become incapacitated eventually. This is something that happens to “someone else,” right?
If this is your stance you should understand the facts. Alzheimer’s disease is not the only cause of incapacity. However, even if there was no other cause, incapacity planning would be a must.
The segment of the population between the ages of 85 and 94 grew faster than any other between the years 2000 and 2010 according to the United States Census Bureau.
If you visit the Social Security Administration website there is a life expectancy calculator. You can enter any age and see the average life expectancy for someone of that particular age. If you do this, you will find that it is likely that you will live into your 80s if you are 65 today.
Now, back to Alzheimer’s disease. According to the Alzheimer’s Association, upwards of 45 percent of people who are at least 85 are suffering from the disease. Some 13 percent of those who are at least 65 have Alzheimer’s. This disease can make it impossible for sufferers to make sound decisions.
When you look at these facts you come away with a clear answer to the question posed at the beginning of this section. No, future incapacity is not something that is very unlikely for the average American.
Who Manages Your Property?
Who would manage your property if you were to become incapacitated? If you have taken appropriate incapacity planning efforts, a decision-maker of your own choosing will be in place to manage your financial affairs.
You could use an incapacity planning device called a durable power of attorney to name an attorney-in-fact to handle your financial affairs in the event of your incapacitation.
This is one possible option. A revocable living trust is thought of primarily as a probate avoidance tool, but it can also be useful as an incapacity planning device.
With this type of trust you can act as the trustee while you are alive and of sound mind, so you don’t surrender control of the assets that have been conveyed into the trust. However, when you are creating the trust agreement, you could include the selection of a successor or disability trustee.
If it was determined that you have become unable to act as trustee, your hand-picked successor trustee would be in place to succeed you.
Parman & Easterday