Incapacity planning is something to take very seriously when you are putting together a comprehensive plan for aging.
Clearly, you are not going to be especially anxious to envision a time when you may not be able to make decisions on your own. At the same time, everyone ages, and incapacity is quite common among people who have reached an advanced age.
If there was no other cause of incapacity, Alzheimer’s disease alone would make incapacity planning an absolute must for serious minded individuals. Once you reach the age of 85 there is a 45 percent chance that you will be stricken by Alzheimer’s disease. This scourge on our nation’s elderly causes dementia. Dementia can strip you of your ability to make sound personal, medical and financial decisions.
Guardianship and Conservatorship
You may wonder how your property would be managed if you were to become incapacitated due to Alzheimer’s induced dementia or as a result of some other health challenge. If you do not have the appropriate incapacity planning documents in place, the state could be petitioned to appoint a guardian or conservator to manage your affairs.
A guardian is someone who would be empowered to act in your behalf in the event of your incapacitation. A conservator does the same thing. In some states a conservator handles financial decisions, and a guardian handles personal decisions.
Here in the state of Indiana the terms “guardian” and “conservator” are interchangeable (See Title 29, Article 3 of the Indiana Code).
Most people would rather select their own hand-picked decision makers rather than allowing the court to appoint a guardian or conservator of its choosing. With proper incapacity planning you can avoid a guardianship or conservatorship.
Incapacity planning is usually going to involve the execution of documents called durable powers of attorney. A durable power of attorney allows you to name an agent or attorney-in-fact who can act in your behalf in the event of your incapacitation.
If you did not include the “durable” designation the instrument would no longer be in effect if you were to become incapacitated.
Successor or Disability Trustee
Many people decide to arrange for future asset transfers through the execution of revocable living trusts. When you create the trust you can name a successor or disability trustee. This individual or entity would administer the resources that have been conveyed into the trust should you become incapacitated and unable to handle your own financial affairs.
Given the expanded lifespans that we are seeing coupled with the ubiquity of Alzheimer’s disease, incapacity planning is an absolute must. If you would like to take action to empower decision makers of your own choosing to act for you in the event of your incapacitation contact our firm to request a free consultation.
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.