Most estate plans focus primarily on what happens after you die. However, without arrangements for what will happen in the event you become mentally or physically incapacitated, your plan is incomplete. If an accident, illness or other circumstances render you unable to make financial or health care decisions — and you don’t have documents in place to specify how these decisions will be made, and by whom — it is likely that a court-appointed guardian and/or conservator will have to be appointed to act on your behalf.
CHOOSING THE RIGHT TOOLS
There are several tools you can use to ensure that a person you choose handles your affairs in the event you cannot:
Revocable trust. Sometimes called a “living trust,” it’s designed to hold all or most of your assets. As an initial trustee, you retain control over your own assets, but in the event you become incapacitated, your designed successor can will take over and administer the trust for and on your behalf.
Durable power of attorney. This authorizes your designee to manage your property and finances, subject to limitations you establish. It should be noted that a Durable Power of Attorney is valid during a period of your incapacity or disability. But, following your death, the designee under a Durable Power of Attorney is no longer authorized to act on your behalf
Living will. It expresses your preferences regarding life-sustaining medical treatment in the event you’re unable to communicate your wishes. Certain states have specific statutes recognizing Living Wills, Michigan does not.
Health care power of attorney. Sometimes referred to as a “durable medical power of attorney,” “health care proxy,” or "designation of patient advocate'" this document authorizes your designee or advocate to make medical decisions for you in the event you can’t make or communicate them yourself.
HIPAA authorization. Even with a valid health care power of attorney, some medical providers may refuse to release medical information — even to a spouse or child — citing privacy restrictions in the Health Insurance Portability and Accountability Act of 1996 (HIPAA). So, it’s a good idea to sign a HIPAA authorization allowing providers to release medical information to your designee.
For these tools to be effective, you must plan ahead. If you wait until they’re needed, a court may find that you lack the requisite capacity to execute them. Also, be sure to check the law in your state. In some states, certain planning tools are not permitted, or go by different names. We can help you address incapacity in your estate plan.