Planning for Incapacity

July 18, 2012 (Press-News.org) Planning for Incapacity

As one investor guide notes, "most people spend more time planning their vacations than planning their estates." The reason is simple; planning a vacation is fun and rewarding, while planning out an estate can be depressing. However, an estate is one of the most important financial decisions anyone makes. Without a strong plan, a significant part of the assets accumulated throughout life can be lost. Yet, many do not have even the simplest of estate plans. According to Forbes, over 120,000,000 Americans do not have estate plans.

Many individuals also make the mistake of assuming an estate plan simply contains a will. However, a strong estate plan will also include various documents that help ensure both financial and medical security is retained in the case of incapacity.

Defining Incapacity

Unfortunately, incapacity has a rather fluid definition. Generally speaking, the term refers to the loss of physical or mental abilities. It can be caused by many things, including dementia, Alzheimer's, substance abuse and mental disabilities. Further complicating matters, this determination can be made by many professionals, including physicians and attorneys.

Incapacitation can apply to a range of activities. For instance, an individual may no longer be able to drive but may retain the mental capacity to sign legal documents. Additionally, some individuals experience fluctuations in capacity throughout the day.

Legally determining incapacitation requires a court proceeding. During this proceeding, a judge determines if the person in question has lost the ability to make decisions regarding both financial and personal affairs.

It is important to note that the question of capacity can arise at any moment. A young person may suffer severe injuries from a car accident or an elderly grandmother could experience the onset of dementia. As a result, it is wise to compile some needed legal documents to ensure that your wishes are met regardless of age.

If these documents are not put together, loved ones may have to file a petition with the court to name a guardian. This guardian will be granted the power to make many decisions on the incapacitated individual's behalf. The proceeding is both emotionally draining and expensive.

There is good news -- with some careful planning the mental and emotional turmoil tied to a guardianship proceeding can be avoided.

Important Legal Documents

The easiest way to avoid this turmoil is to plan for incapacity. Some key legal documents include:
-Durable power of attorney
-Health care power of attorney
-Health care directive or living will

A durable power of attorney designates a third party intermediary to make medical and financial decisions on the incapacitated party's behalf. This document allows people the power to choose who will make these important decisions. Without it, the court may appoint a guardian to make financial decisions. This can help ensure that all bills are paid on time and that financial matters are handled in a timely manner even upon the event of incapacitation.

Under Virginia law, there is no formal oversight of the individual given the power to make these decisions. Although a fiduciary duty exists to prudently oversee the incapacitated individual's financial affairs and act in the incapacitated party's best interest, it is highly recommended that a durable power of attorney be granted only to a trusted individual. If there is not an individual that is trusted to act in this capacity, this tool is not recommended.

It is also recommended that a health care power of attorney be written to designate someone to make health care decisions in the event of incapacitation. This document can help avoid argument between family members over what treatments their loved one would or would not desire. The chosen person, known as the attorney-in-fact, has the legal power to make these decisions.

Further strife can be avoided by preparing a living will. A living will is a document that is designed to express a person's desires regarding medical treatment. It is similar to a durable power of attorney, except the medical directives are outlined by the person themselves instead of by a chosen third party. Additionally, this document comes into play only when the writer is in a permanent vegetative state or terminally ill and unable to communicate medical preferences, while a durable power of attorney begins whenever the person granting power is found to be incapacitated.

In addition to providing a list of treatments that are not desired, a living will can also outline which medical options are favorable. For example, a person can specify that they do not wish to be resuscitated but are comfortable receiving a feeding tube.

These documents are fluid, and can be changed or revoked as long as the individual is mentally competent.

It is important to properly tailor these legal documents to fit each individual's needs and desires. As a result, it is wise to seek the counsel of an experienced Virginia estate planning attorney to discuss your incapacity planning options.

Article provided by Surovell Isaacs Petersen & Levy PLC
Visit us at www.smillaw.com