Most people look at estate planning from a purely financial perspective, but you should think comprehensively. When you plan your estate, you should also consider the issues that you may face toward the end of your life.
When you look at the facts, you see that people are living longer and longer lives. Once you reach the age of 65, it is likely that you will live into your eighties. If you reach an advanced age, incapacity becomes a very real possibility.
At least 40 percent of the oldest old are suffering from Alzheimer’s disease according to the Alzheimer’s Association, and this is not the only cause of incapacity.
If you take no steps in advance to prepare for possible incapacity, the state could decide your fate if you were to become unable to make sound decisions on your own. Interested parties could petition the state to convene a guardianship proceeding. Ultimately, the state could appoint a guardian to handle your affairs.
This is not necessarily all bad, because a void may exist, but you would lose control of the decision-making process. Plus, everyone in your family may not be on the same page.
Durable Powers of Attorney
You have the power to take action in advance. An incapacity plan will typically involve the execution of legally binding documents called durable powers of attorney. The “durable” designation is important, because a power of attorney that is not durable would no longer be in effect if the grantor of the device was to become incapacitated.
For health care decision-making, you could execute a durable power of attorney for health care. These documents are sometimes called health care proxies.
A durable financial power of attorney could be executed to name someone to manage your financial affairs in the event of your incapacitation.
You assert your own preferences when you execute durable powers of attorney. As a result, the decision-makers that you empower would be able to act on your behalf. The state would not be called upon to appoint someone to serve as a guardian.
The power of attorney essentially terminates when you say that it does. You could create a power of attorney that was only in effect for a limited period of time.
However, if you are using a durable power of attorney to account for incapacity, you are preparing for an end-of-life issue. As a result, you would probably want the power of attorney to remain effective throughout the entirety of your life.
It should be noted that the power would no longer be effective after your passing.
If you would like to learn more about incapacity planning and durable powers of attorney, send us a message through this page to request a free consultation: Indianapolis IN Estate Planning Attorneys.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.