Estate Planning Red Flag: You Haven’t Planned for Incapacity

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Estate planning is often associated with death. But it’s just as important for your plan to address incapacity associated with illness, injury, advanced age or other circumstances.
Unless you specify how financial and health care decisions will be made in the event you become incapacitated, there’s no guarantee that your wishes will be carried out. Plus, without a plan, your loved ones will be saddled with the difficult task of seeking a court-appointed guardian.

Financial Tools

On the financial side, planning tools you should consider include:

  •  A revocable living trust. You transfer your assets to the trust, retaining control over your financial affairs by serving as trustee. In the event you become incapacitated, your chosen representative takes over as trustee.
  •  durable power of attorney. This document authorizes your representative to manage your financial affairs and control your assets, subject to limitations you establish.
  • Joint ownership. Holding title to property jointly with another person allows him or her to manage the property in the event you become incapacitated. It’s a simple, inexpensive strategy. But it produces two results that may or may not be desirable:

1) It provides your co-owner with immediate, unrestricted access to the property, and

2) the property will pass to him or her when you die. Joint ownership also may trigger negative tax consequences.

Health Care Tools

On the health care side, the primary planning tool you should consider is:

  • A health care power of attorney. Also referred to as an Advance Health Care Directive, Durable Medical Power of Attorney or Health Care Proxy, this document appoints a representative to make medical decisions for you in the event you can’t make them yourself. California’s statutory Advance Directive also allows you to communicate your preferences life-sustaining medical intervention — such as artificial nutrition or hydration — under specified, life-threatening circumstances.

Tools for Minor Children

  • A Guardian Nomination. A stand-alone Guardian Nomination allows you to designate a guardian (and/or temporary guardian) for your minor children.

Your attorney can help you prepare the documents necessary to implement these estate planning tools.
If you have any questions, please contact Thatcher | Law or another qualified estate planning attorney.

Wishing you peace.