Every now and then, even young and healthy people become suddenly incapacitated. In contrast, very old people may never have a problem. Therefore, each of us should have a contingency plan in place to protect ourselves, our loved ones and our financial well-being.
Forbes’s recent article, “Protect Yourself Against Diminished Capacity,” reminds us that incapacity can be either mental or physical, and it can be for a short time or permanent.
Based on your financial situation, health, and age, long term health care and/or disability insurance might be a wise strategy. That’s because you can insure against loss of income and the direct costs of assisted living arrangements. In addition, there are some legal documents that can prevent many problems for your family, care givers and yourself. Let’s review some of these:
If you have properties, business interests and investment accounts, holding them in revocable living trust gives you several benefits. Most people want to be the sole trustee (decision maker), as long as they’re able to do so. Until and unless you’re unable to act for yourself, you control the assets and retain all powers to act. In the event you’re not able to act for yourself, a trust will designate a contingent trustee to act on your behalf, until you can resume the management of your affairs.
You can decide the circumstances in which they would take control and the powers they’d have to act on your behalf. Your trust might create the basis of your estate plan to avoid probate, minimize estate taxes, distribute your property as you want and protect your family from financial predators.
A financial power of attorney can help with decisions about your checking accounts, savings accounts, your home or personal property. You appoint a person to act on your behalf to pay your bills, etc.
Healthcare directives and medical powers aren’t only for end-of-life situations. They can be used if you suffer an accident or illness that leaves you unable to give or withhold informed consent.
These legal documents should be prepared to account for your individual wishes and situation and remember that every state has different requirements. Work with a qualified estate planning attorney to create a plan and have these documents properly prepared.
It’s important it is to act now, before incapacity hits.
Reference: Forbes (August 9, 2018) “Protect Yourself Against Diminished Capacity”