What is Incapacity Planning?

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A comprehensive estate plan doesn’t only include instructions for what will happen to your property when you pass away — it should also include a plan for incapacity. Incapacity planning specifies who will handle your financial and business affairs in the event you become ill and can no longer handle these matters on your own. While we often think of dementia and Alzheimer’s when it comes to incapacitation, an illness or debilitating injury can affect a person at any age. It's important to have the necessary documents in place to ensure your wishes are carried out if you are unable to communicate them.

What is Incapacity Planning?

If you become incapacitated, it means that you will be rendered incapable of making informed decisions about your finances and health. Age, physical illness, mental illness, and dementia are common reasons a person would be declared incapacitated. Specifically, incapacity planning is about taking precautionary measures by outlining who will handle your financial matters, daily affairs, and make healthcare decisions if you cannot speak for yourself. Unlike the tools used in estate planning, which become effective upon your passing, incapacity planning allows you to put a strategy in place to deal with periods of medical incapacity or end-of-life scenarios.

What Does an Incapacity Plan Include?

An incapacity plan can allow you to retain control of your financial matters and healthcare choices — and ensure that your objectives are met. Without an incapacity plan in place, a judge can appoint someone to take control of your assets and make medical decisions on your behalf. Depending on your needs, there are a number of documents that can be included in an incapacity plan.

While it is up to you to determine what to include, an incapacity plan can include the following documents:

  • Living will — A living will allows you to document the type of care you would like to receive in advance if you become unconscious or terminally ill. It is different from a last will and testament in that it details how you prefer to receive medical treatment and name who will make these decisions for you.
  • Do-not-resuscitate order — A do-not-resuscitate (DNR) order is a directive that means CPR is not to be conducted in the event of cardiac or respiratory arrest.
  • HIPAA release form — A HIPAA release is a document that allows you to grant an agent the right to access your medical records and information, which would otherwise be protected by law.
  • Financial power of attorney — A financial power of attorney is a legal document that gives someone else the right to handle your financial, business, and real estate matters if you are unable to do so as a result of incapacity.
  • Healthcare power of attorney — A healthcare power of attorney is a legal document that authorizes an agent to make healthcare decisions that are consistent with your wishes.
  • Revocable living trust — A revocable living trust is used during your lifetime to manage your assets and safeguard them.

There is no right or wrong time to create an incapacity plan. However, it’s critical to be aware that the unexpected can happen at any time and it’s best for individuals to put a plan in place when they have reached the age of majority. Once you have created your incapacity plan, it is essential to review it periodically to ensure it is up to date and meets your objectives. An incapacity plan should also be reassessed after a marriage, during a divorce, upon the birth of a child, or another life-changing event.

What are the Benefits of Creating an Incapacity Plan?

Creating an incapacity plan comes with a number of benefits for both you and your loved ones. Not only can an incapacity plan allow you to remain in control of your future, it can also be used to save money that would later be spent on court costs and attorney fees. In addition, an incapacity plan can help avoid delay in receiving medical treatment and the management of your assets. Without having a plan in place, extensive court proceedings may be needed, especially if a guardianship must be established.

For instance, if you were to become incapacitated and a guardianship was needed, there would be ongoing court involvement and substantial fees would be incurred. By having a comprehensive plan in place, you can save your family a significant amount of stress and anxiety — as well as the expenses that they would have to pay for guardianship proceedings.

An incapacity plan can also prevent others from taking advantage of you in the event you cannot defend yourself. Notably, you are in charge of appointing who will make your financial and healthcare decisions on your behalf. You can also use provisions in your plan to specify your wishes for various situations so that your designated agent will follow your directives.

Contact an Experienced Ohio Estate Planning Attorney

Planning for incapacity can be an overwhelming process — but a knowledgeable attorney can walk with you every step of the way. Located in Bowling Green, Middleton Law Offices is dedicated to working with clients to create tailored estate plans and incapacity plans that reflect their wishes. Contact Middleton Law Offices today at (419) 548-0197 to schedule a consultation to discuss creating your comprehensive estate plan and incapacity plan.

Categories: Estate Planning