Legal Planning For Incapacity Explained
Incapacity Planning is planning for how your affairs will be handled if you become unable to handle your own affairs due to injury, illness, or mental condition. It can involve Durable Powers of Attorney, Health Care Powers of Attorney, what is sometimes called a Living Will or Directive to Physicians, and various types of trusts.
A Durable Power of Attorney is a document in which you grant someone else the power to act on your behalf. It is “durable” because the person to whom you grant the power continues to have that power after you become incapacitated. Incapacity can result from injury, illness, or mental condition. This power of attorney can be granted to be effective immediately and not affected by later incapacity or it can be granted now to become effective only if you become incapacitated. Often, a Durable Power of Attorney gives broad powers concerning your financial matters, but it can also be limited in its scope.
A Health Care Power of Attorney is similar to a Durable Power of Attorney and can be made to be “durable”. However, the powers granted are limited to those relating to your health care, treatment, emergency care, hospitalization, etc. The health care powers can be included in a Durable Power of Attorney that also deals with financial matters or it could be a separate document. For example, you might want to give one person power to deal with your financial matters, but someone else the powers relating to your health care. In that case, separate documents might be appropriate.
A Living Will, sometimes referred to as a Health Care Directive or Directive to Physicians, is a document that expresses your wishes if extraordinary measures would be needed to keep you alive. Unlike a will that expresses your wishes for distribution of your property upon your death, a Living Will does not deal with property at all. Instead, it guides doctors in the care you want to receive in certain limited circumstances. If you need surgery or are being admitted to a medical facility for some other reason, you will most likely be asked whether you have a Living Will or similar document. If you do not, you will most likely be offered the opportunity to sign a form of document provided by the medical facility. But you may not be given sufficient time to read and understand the form or have any questions answered by an objective adviser. The planning process allows you to consider the issues and tailor the document to your wishes, within certain legal requirements, without the pressures of time constraints and lack of information.
A Trust is a way for another person, the trustee, to hold property for your benefit or someone else’s benefit. The trustee is responsible for managing the trust property and distributing the property to the trust beneficiary or for his or her benefit according to the terms of the trust. The trustee owes the trust beneficiary or beneficiaries certain duties to take care of the trust property and follow the terms of the trust. It works similarly to a Durable Power of Attorney because someone else has authority to deal with your property, but it is different from a Durable Power of Attorney since you transfer your property to the trustee to be held in the trust. A Trust can be revocable or irrevocable. If the Trust is irrevocable, you give up your ability to change the trust. So, proper drafting of the trust document is essential. A Trust can be established for the benefit of a child, a minor. It might be established to provide funds for every day living in the event the primary provider of such funds is unable to do so. It might be established to provide funds to pay for the child’s education. A Trust can be established for a person with “special needs”, whether that person is the person establishing the trust or someone else. “Special needs” trusts are often used to protect assets when the beneficiary of the trust is someone who is receiving or may in the future want to qualify to receive public assistance benefits in various forms. In some cases, property owned directly by a person may prevent that person from qualifying to receive needed public assistance benefits. The special needs trust addresses that issue.
A Guardianship is a formal court proceeding where the court names a person to serve as “guardian” of an individual and/or the property of the individual. There can be a full guardianship or a limited guardianship. In a full guardianship, a guardian can be appointed for an individual who has “a significant risk of personal harm based on a demonstrated inability to adequately provide for nutrition, health, housing, or physical safety”; or an individual who is “at significant risk of financial harm based on a demonstrated inability to adequately manage property or financial affairs”; or an individual under the age of 18. A limited guardianship can be established for individuals who are capable of managing some of their personal and financial affairs. A court must look at the evidence presented to it to determine if a guardianship should be established. The guardian is, in effect, a trustee and is held to a high standard of conduct. Guardians and limited guardians are subject to continuing supervision by the court that appoints them. Most significant acts by a guardian require court approval before the act is performed.