Your estate plan should be holistically prepared to address the eventualities of aging along with the postmortem process of asset distribution.
Incapacity planning is part of the equation. Because many people become unable to handle their own affairs late in their lives, powers of attorney are often used. With a power of attorney you can name someone else to act on your behalf. This representative is known as the agent or attorney-in-fact.
A standard power of attorney that is not designated as durable does not remain in effect if the person who created the document (the grantor or principal) becomes incapacitated. For this reason, durable powers of attorney are used for incapacity planning purposes.
Who can act as the grantor of a power of attorney? The answer is that anyone can execute a power of attorney, as long as the individual in question is an adult who is of sound mind who is not being coerced in any way.
The grantor of a power of attorney must be in full control of his or her faculties, and this is something to take into consideration when you are using the document for incapacity planning purposes. You should certainly execute a durable power of attorney while you are unquestionably of sound mind.
Negative consequences could result if you wait until you feel a sense of decline. Interested parties could come forward contending that you signed the power of attorney when you were not fully capable of understanding what you were doing.
Their motives could be self-serving, but on the other hand, they could be right.
Financial vs. Health Care Decision Making
When you are using durable powers of attorney to plan ahead for possible incapacity, you are appointing potential future decision-makers. There are different types of decisions that may become necessary.
The person that you would like to empower to handle your financial affairs may not be the person that you would want making medical decisions on your behalf. You can account for this by naming different respective agents in two different powers of attorney.
Incapacity Planning is a Must
If you are thinking that it is unlikely that you will ever become incapacitated, you should understand the fact that around 45 percent of people who are at least 85 have Alzheimer’s disease. The segment of the population that is between 85 and 94 grew faster than any other ten-year age grouping between the years 2000 and 2010 according to the United States Census Bureau.
Alzheimer’s is certainly a very real and present danger. However, it is not the only cause of incapacity among our nation’s elders.
Everyone should take action to implement an incapacity plan. Hopefully you will remain perfectly capable of handling your own affairs up until the time of your death. The wise course of action is to hope for the best as you pragmatically prepare yourself for any contingencies that you may face during the latter portion of your life.
- Act in Advance to Prevent a Conservatorship - April 27, 2021
- Beneficiary Designations and the SECURE Act: Prior Designations - April 20, 2021
- Beneficiary Designations and the SECURE Act: Eligible Designated Beneficiaries - April 16, 2021