Most people don’t know the importance of setting up an estate plan in Southern Utah, also referred to as an incapacity plan.
When such people are asked, they give predictable answers, such as “to avoid probate and taxes,” “to distribute their wealth when they’re gone,” “to provide for their family,” “to pick a guardian to cater to their children when they die.
While all of these reasons and many more are good reasons to set up an estate plan, there is one very important benefit of setting up an estate plan that is always overlooked – planning for incapacity.
The truth is, an estate plan does more than just give guidance and directions to our family members when we die.
It also gives our loved ones critical guidance on how to go about fulfilling our wishes while we’re still alive, but now unable to fulfill those wishes on our own – a condition referred to as “legal incapacity.”
Most times, legal incapacity occurs due to dementia or Alzheimer’s, which may set in unannounced.
So, if you’ve not properly planned for legal incapacity before it occurs, you may leave your loved ones scrambling to get legal permission to manage your financial affairs, or agonizing over medical choices on your behalf.
Don’t get things twisted! You’re currently very young and “obviously” have several years before you to worry about planning for legal incapacity.
But what if an unplanned event, such as a sudden illness or accident, occurs and renders you incapable of making important medical and financial decisions.
Hence, every adult needs to make plans for legal incapacity. If you’re still in doubt, this article will outline the benefits of setting up an estate plan with Ruesch & Reeve before dementia or Alzheimer’s sets in. So, read on.
What is Dementia or Alzheimer’s?
Before we discuss the benefits of setting up an estate plan, it’s important to quickly explain what dementia or Alzheimer’s is. Dementia is a medical term that refers to a set of symptoms, such as unclear thinking, memory loss, and a decline in problem-solving skills. Other common causes of dementia include severe illness, accident, Huntington’s disease, Parkinson’s disease, Frontotemporal Dementia, etc. Nearly 50% of Americans will have a diagnosis of Alzheimer’s Disease by the age of 85.
Benefits of Setting up an Estate Plan
There are two basic benefits associated with setting up an estate plan with Ruesch & Reeve, before legal incapacity sets in, which include:
To make healthcare decisions about yourself and take care of related financial matters.
1). To Take Care of Your Financial Matters
For instance, if you are seriously injured or ill and develop dementia or Alzheimer’s, you may not be able to focus on filing your taxes, managing your investments and assets, and paying your bills.
Although those things can still be handled by someone with the authority to handle them, it is never an easy process if you hadn’t set up an estate plan before dementia.
If you haven’t set up an estate plan in Southern Utah before developing dementia, you would only create a difficult situation for your loved ones, who may need to go to court to obtain a conservatorship over your finances.
Obtaining conservatorship from the court isn’t an instant process and may take up to several weeks or months. Note that during this processing time, your bills may pile up with penalties accruing. Whereas, if you’ve created a financial power of attorney (POA) with your estate plan, your appointed person (and not the court) can easily and quickly step in the very moment they are needed to manage your financial affairs for as long as necessary.
2). To Take Care of Your HealthCare Decision
Another benefit of setting up an estate plan with Ruesch & Reeve is to have a trusted person make and handle your healthcare decisions on your behalf when you’re unable to do so due to dementia or Alzheimer’s.
Nobody plans for accident or illness but any of them can occur suddenly at any time. And when they occur, they leave no time for the subject to make urgent decisions.
Worse still, the patient privacy laws in place may deny your loved ones or family members access to your medical information when they need it most.
More so, without an incapacity plan in place, your loved ones or family members may end up getting into a disagreement about your healthcare decision, which could lead to a serious family fight over your hospital bed for years.
However, an easy way to ensure that you enjoy the best healthcare decision and that your best medical interests are served is to set a prior estate plan. The estate plan will also preserve harmony or at least reduce discord among your family members.
Summarily, it’s very painful or imaginable to picture a future where you may suffer from dementia or Alzheimer’s. So, you tend to neglect the need for an estate plan.
But if you don’t set up an estate plan before dementia or Alzheimer’s, you’re not only putting your healthcare and estate at risk but you may also put your family at risk.
Once your dementia reaches the point where you can no longer understand your assets, remember family members, understand documents’ purposes, or create an incapacity plan, the only option your family members have is to file for Guardianship.
Filing for Guardianship from the court becomes necessary, especially if you’ve not executed a Financial POA to give a family member of your choice the authority to act for you financially, or a HealthCare POA that gives your trusted person the authority to make medical decisions on your behalf.
Always remember that, if you have no estate plan in place, there is a possibility that all your assets would be passed under the State’s Intestacy Rules at your death.
More so, without a Will, there are no protective trusts to shelter assets for your loved ones and the Intestacy Rules don’t consider your wishes. You must have created a Will that reflects your real desires.
Documents Necessary for Incapacity Planning
Now that you’ve understood the benefits of setting up an estate plan before the unforeseen case of dementia or Alzheimer’s sets in, let’s discuss all the necessary documents you need for incapacity planning
1. Living Trust (Revocable Trust)
A Living Trust also referred to as a revocable trust, is a very good document to have in place even if you may never become incapacitated.
Just as the name states, living trust is simply a document that gives the right to someone you trust to handle or manage any of your properties while you’re still alive. It is revocable, in that, you can choose to amend or end the trust easily at any time.
To set up a Living Trust, your estate planning attorney at Ruesch & Reeve in Hurricane, would draw up a trust document, where you would place your assets, such as bank account, companies, investments, house, etc., in the trust’s name instead of your name.
While you’re alive, both you and your trustee are beneficiaries, handling, managing, and using the assets as you’ve always been doing.
The living trust will name a successor trustee, who will take over your assets in the event of death or incapacitation.
However, the beauty of living trust is that you’re the sole dictator of how the assets should be distributed and managed.
Even in your demise, your successor trustee is legally bound to follow your stated instructions – that’s because you established the living trust.
While the Living Trust names your successor trustee at your death, Will reflects your wishes.
Without a Will, the state determines where your assets pass at death as the State provides no protective trusts and disregards your wishes.
However, a properly drafted Will ensures that your assets provide for your spouse’s care.
3. Irrevocable Trust
The Irrevocable Trust differs in function from the Revocable Trust.
It is an excellent tool that protects your assets from creditors, keeps your assets separate from your spouse’s assets, reduces estate and inheritance taxes, and removes property that might cause a dispute between your spouse and children at your death.
An Irrevocable Trust addresses so many different situations and protects your spouse should in case you suddenly became incapacitated.
4. Financial Power of Attorney
Even with a thorough living trust in place, you will still have to create the Financial Power of Attorney with Ruesch and Reeve in Hurricane, Utah. This is because there are some financial matters beyond the view of the Living Trust.
With the financial power of attorney (POA), you can appoint somebody you trust (your loved one or agent) to pay your bills, handle your investments, and manage your finances when you become incapacitated.
There are two types of financial Power Of Attorney that you can create – the durable POA and the springing POA.
The durable POA only becomes effective as soon as you sign the document and continues to be effective if you’re incapacitated.
The springing POA, just as its name depicts, springs into action immediately you become incapacitated. Each of them has its advantages. You need to discuss with your estate planning attorney to decide which is better for you.
Your appointed person would be able to handle mundane tasks, such as depositing your Social Security checks, sorting your email, handling complex tasks like monitoring your investments and retirement accounts and filing your tax returns, on your behalf.
5. Medical Power of Attorney
Medical Power of Attorney is referred to as a healthcare proxy or Designation of Patient Advocate (DPA) in some states.
Generally, this document gives your appointed person or agent the authority to make healthcare decisions for you in the event you become incapacitated.
Before assigning this right to anyone, it is important that you discuss your wishes with your appointed person or trusted agent before he or she needs to make those critical healthcare decisions.
6. Living Will
Most times, the living will is confused with a medical POA. Hence, it may not be enforceable in all states.
However, they are not the same and cannot be used interchangeably, although both documents work hand-in-hand.
Unlike a medical POA, a Living Will outlines your wishes as regards end-of-life care in the event you become incapacitated. A Living Will provides critical information about your wishes to the agent you have authorized to make your medical decisions.
7. HIPAA Authorization
The HIPAA (Health Insurance Portability and Accountability Act) is a federal law specially designed to protect your privacy, among other things.
The law prohibits your medical providers from sharing your medical information with your loved ones, even your medical POA appointee.
This may affect your healthcare decision, especially when you’re incapacitated and unable to make any decision for yourself.
However, if you’ve signed a HIPAA authorization or release, it will become much easier for your doctor or medical team to communicate necessary information about your health status to your family members, especially your medical POA appointee.
This will, in turn, facilitate your healthcare decisions and medication.
These documents mentioned above are very necessary for incapacity planning. If your current estate plan doesn’t include these documents, you’re at great risk. Don’t hesitate to give your estate planning attorney at Ruesch & Reeve a call today.
Luckily, you may not need an incapacity plan. But if you do, your family members and loved ones would be boundlessly grateful that you took your time to create it.
What Can Happen If You Don’t Have an Estate Plan but Becomes Incapacitated?
If you haven’t created an estate plan with Ruesch and Reeve before the unlikely incident that rendered you incapacitated occurred, two things can likely happen when it concerns your health and assets (including investments and finances):
In the case of a sudden accident or illness that rendered you incapacitated while your spouse also has advanced dementia and you have no POA in place, your family members would have no option than to petition the court for a Guardian.
This process can become complicated, especially if your spouse is unable to care for you and fights with family members for this right.
Family conflict can occur, causing permanent damage to “cordial” relationships.
If you eventually die without an estate plan, all your assets will pass under the State’s plan. The intestacy rules might give all your assets to your incapacitated spouse, who is also unable to manage these assets.
Or to your spouse who may be vulnerable to other people’s deceptions.
Note that the Intestacy Rules don’t make your wishes (without a Will) into consideration. A Will allows you to make plans that reflect your real desires.
Nobody plans for an ill event but we shouldn’t be caught unaware.
If you’ve got any questions relating to estate planning or want to know how to begin your estate planning process, please contact us to schedule a free consultation in Southern Utah.