When it comes to estate planning, most people automatically think about taking steps to make sure that the people they want get their stuff when they pass away. While this is an important part of estate planning, it leaves out one of the most important pieces: planning for life, and not just death. Most people think of estate planning as death planning, but I want to challenge that thought and have you think about it being as much about incapacity planning as death planning.
Planning that’s focused solely on who gets what when you die is ignoring the fact that death isn’t the only thing you must prepare for. Have you ever considered the fact that at some point before your death, you could be incapacitated by accident or illness?
Each of us is at constant risk of getting sick or having an accident which causes us to be incapable of caring for ourselves. Incapacity can be a temporary event from which you eventually recover, or it can be the start of a long and costly event that ultimately ends in your death. Indeed, incapacity can drag out over many years, leaving you and your family in agonizing limbo. This uncertainty is what makes incapacity planning so incredibly important.
In fact, incapacity can be a far greater burden for your loved ones than your death. This is true not only in terms of its potentially ruinous financial costs, but also for the emotional trauma, contentious court battles, and internal conflict your family may endure if you fail to address it in your plan.
The goal of effective estate planning is to keep your family out of court and out of conflict no matter what happens to you. So if you only plan for your death, you’re leaving your family—and yourself—extremely vulnerable to potentially tragic consequences.
Where to start
Planning for incapacity requires a different mindset and different tools than planning for death. If you’re incapacitated by illness or injury, you’ll still be alive when these planning strategies take effect. So many people think that their Last Will and Testament is all they need, but they don’t realize that the Will is only effective when you pass away, so if you’re incapacitated and still alive, it doesn’t control anything. On the other hand, under incapacity planning, the legal authority you grant others is only viable while you remain alive and unable to make decisions about your own welfare.
If you regain the cognitive ability to make your own decisions, for instance, the legal power you granted others is revoked. The same goes if you should eventually succumb to your condition—your death renders these powers null and void.
To this end, the first thing you should ask yourself is, “If I’m ever incapacitated and unable to care for myself, who would I want to make decisions on my behalf?” Specifically, you’ll be selecting the person, or persons, you want to make your healthcare, financial, and legal decisions for you until you either recover or pass away.
You must name someone
The most important thing to remember is that you must choose someone. If you don’t legally name someone to make these decisions during your incapacity, the court will choose someone for you. And this is where things can get extremely difficult for you and your loved ones. Quite often people struggle with the decision of who to name, and the advice I give is just choose someone. Making a choice, even if that choice isn’t the perfect choice, is better than leaving that choice to the courts and forcing a judge to make the decision for you.
In Georgia, in the absence of proper estate planning, the court will typically appoint a guardian and/or conservator to make these decisions on your behalf. The guardian is the person who makes decisions about your health and welfare (where to live, what to eat, what medical decisions are made, etc) and the conservator makes decisions about your finances. This could be one person fulfilling both roles or the roles could be split up between two different people. However, that person(s) could be a family member you’d never want managing your affairs, or a professional guardian who charges exorbitant fees, and could even potentially decimate your estate. Either way, the choice is out of your hands.
Furthermore, like most court proceedings, the process of naming a guardian is often quite a time-consuming, costly, and emotionally draining task for your family. If you’re lying unconscious in a hospital bed, the last thing you’d want is to waste time or impose additional hardship on your loved ones. And this is assuming your family members agree about what’s in your best interest.
For example, if your family members disagree about the course of your medical treatment, this could lead to ugly court battles between your loved ones. In the absence of you expressing your wishes through an incapacity plan, Georgia law lists out a long list of people who can make decisions for you, and that list is quite extensive (see O.C.G.A. 31-9-2). However, if two people on this list disagree, again, you’re looking at a potential court battle which can tear your family apart and drain your finances. In the end, the individual the court eventually appoints may choose treatment options, such as invasive surgeries or nutrition options, that are the exact opposite of what you’d actually want.
This potential turmoil and expense can be easily avoided through proper estate planning provided it includes incapacity planning. An effective plan would give the individuals you’ve chosen immediate authority to make your medical, financial, and legal decisions, without the need for court intervention. What’s more, the plan can provide clear guidance about your wishes, so there’s no mistake or conflict about how these vital decisions should be made.
What won’t work
Determining which planning tools you should use to grant and guide this decision-making authority depends entirely on your personal circumstances. There are several options available, but choosing what’s best is something you should ultimately decide on after consulting with an experienced lawyer like us.
That said, we can tell you one planning tool that’s totally worthless when it comes to your incapacity: a will. Like mentioned above, a will only go into effect upon your death, and then it merely governs how your assets should be divided. Having a will does nothing to keep your family out of court and out of conflict in the event of your incapacity.
The proper tools for the job
There are multiple planning vehicles to choose from when creating an incapacity plan. And this shouldn’t be just a single document; instead, it should include a comprehensive variety of multiple planning tools, each serving a different purpose.
Though the planning strategies you ultimately put in place will be based on your particular circumstances, it’s likely that your incapacity plan will include some, or all, of the following:
Georgia Advance Directive for Healthcare: The Georgia Advance Directive for Healthcare is a document created by our legislature which allows you to appoint someone to make medical decisions for you if you can’t make them yourself. It also allows you express your wishes as to end of life situations and how you would want your body handled if you became incapacitated.
Durable financial power of attorney: A planning document that grants an individual of your choice the immediate legal authority to make decisions related to the management of your finances, real estate, and business interests.
Revocable living trust: A planning document that immediately transfers control of all assets held by the trust to a person of your choosing to be used for your benefit in the event of your incapacity. The trust can include legally binding instructions for how your care should be managed and even spell out specific conditions that must be met for you to be deemed incapacitated.
While each of these documents is important, they are often of limited usefulness without the counsel and guidance of a personal lawyer who knows you, knows what’s important to you, knows how to locate your assets, and who can guide your family when they don’t know where to turn.
Don’t let a bad situation become much worse
You may be powerless to prevent your potential incapacity, but estate planning – which should be about so much more than just your “estate” -- can at least give you control over how your life and assets will be managed if it does occur. Moreover, such planning can prevent your family from enduring needless trauma, conflict, court intervention, and expense during an already trying time.
If you’ve yet to plan for incapacity, meet with us right away. We can counsel you on the proper planning vehicles to put in place, and help you select the individuals best suited to make such critical decisions on your behalf. If you already have planning strategies in place, we can review your plan to make sure it’s been properly set up, maintained, and updated. Contact us today to get started.