Incapacity is a very basic part of estate planning. The following short video will give you a brief understanding of the what documents may be needed.
As medical advances extend human life expectancy, the likelihood that an individual will become incapacitated before dying increases. For … wealth planning and conservation purposes, it is important that we recognize when [someone] is incapacitated and thus unable to execute estate planning documents or manage his or her affairs.
Estate planning requires the ability to understand what you are doing. However, due to age, injury or illness, at what point might you have too little understanding to make legal plans? That’s a tough call.
What is incapacity for legal purposes, how do you define it, and how do you keep an accusation of incapacity from ruining your highest hopes for your loved ones? Much is at stake. The estate plans you make affect your life, the lives of your loved ones and, certainly, the management and disposition of your hard-earned assets.
The topic of capacity or incapacity –being “of sound mind and body” – is indeed a difficult one. This issue was addressed in a recent article in the Journal of Financial Planning titled “Defining Incapacity in the Modern Estate Plan.” The article is based on California law, but if you are caring for an elderly loved one, the message is the same: defining legal capacity can be incredibly difficult.
One way to avoid the need for the determination of incapacity is for documents to have a "present" power, meaning that your agent can act for you now while you are capacitated. Obviously, such a decision requires trust on your part to allow someone to possibly act for you now while you can still make your own decisions. However, most of the time, a conversation with that person will confirm that they understand that they will not act until or unless you ask them to do it or it becomes obvious to them that you can no longer make your own decisions.
Much ink has been spilled by lawyers, judges, and family members over the years defining it, too. The biggest teaching point from the article (and my own experience with clients) is to “ink” your own estate plans sooner rather than later. You likely will never again be as sharp as you are today.
Procrastination is the death bed of proper estate planning. Consider scheduling a compliementary consultation with us today.
Reference: The Journal of Financial Planning (May 2012) “Defining Incapacity in the Modern Estate Plan”