Estate planning is often looked upon as a purely financial endeavor. You facilitate postmortem asset transfers to your loved ones, and that’s the long and short of it.
In reality, there is another important factor to consider, and we will examine it in this post.
Cognitive Impairment and Physical Incapacity
Elder law and estate planning attorneys have to address some realities that a lot of people do not like to think about. Even if you wish it was not so, you cannot change the nature of life, so it is wise to look at the future with clear eyes and make the appropriate preparations.
When you celebrate your 67th birthday, your life expectancy will be at least 85 years depending on your gender. The Alzheimer’s Association tells us that 32 percent of people that are 85 years of age and older have contracted the disease.
There are other causes of dementia, and more than half of people in nursing homes pass away with cognitive impairment. Clearly, people that are in this position cannot handle their own affairs.
Physical health ailments can sap you of your energy when you are an elder, and in many cases, comfort care medication will be administered. Many people that are struggling with situations like these are not going to be able to make sound financial decisions.
If you do nothing to prepare for possible incapacity, people close to you can petition the state to appoint a guardian to act on your behalf. Under these circumstances, family members do not always agree, and this can cause acrimony at the worst possible time.
Plus, the person that is chosen to act as your guardian may not be the individual that you would have selected, and this is another drawback.
Empower Financial Decision Makers
You can take the matter into your own hands and prevent a guardianship if you take the right steps in advance. If you have a living trust, you would act as the trustee while you are alive and well, so you would control the assets.
To account for possible incapacity, you can empower a disability trustee when you establish the trust. It can be the person that is going to act as the successor after your passing, or if you become incapacitated.
A durable power of attorney for property can designate an agent to manage the assets that are not held in the name of a trust. The “durable” designation is important, because it will allow the power of attorney to remain in effect after you become incapacitated. Surprisingly, some old state laws stipulated that the agent’s power ended at the point you become incapacitated. The power can be given to the agent immediately upon signing the document.
There is also a springing durable power of attorney that will only become active when it is determined you are incapacitated. We will discuss how your incapacity is determined in another blog.
Advance Directives for Health Care
In addition to the financial side of the equation, you should also account for medical decision-making.
A living will is an advance directive for health care that is used to state your preferences regarding life-support usage. In Oklahoma, this document only applies if you are terminal, persistently unconscious, or have an end-stage condition. You can select your preferences for treatment one by one. You can also add your comfort care medication and organ and tissue donation choices.
There are many more medical situations that do not meet the criteria of a living will. These are conditions that do not require life-support. You may have a heart attack or accident that may temporarily put you in peril but may not be life threatening. A durable power of attorney for health care should be added to empower someone to make these decisions on your behalf if it becomes necessary.
Due to a provision contained within the Health Insurance Portability and Accountability Act (HIPAA), doctors are required to keep patient information confidential. Your plan should include a HIPAA release to give your doctors the freedom to discuss your condition with your agent and others you may designate.
Schedule a Consultation Today!
Today is the day for action if you are going through life without an estate planning with a solid incapacity planning component. When you choose our firm, we will make sure that all your bases are covered, and your plan will be custom crafted to ideally suit your needs.
You can schedule a consultation at our Oklahoma City estate planning office if you call us at 405-843-6100, and you can use our contact form if you would like to send us a message.