Dealing With Incapacity

We receive more calls these days from clients who have parents, spouses or other loved ones dealing with temporary and permanent incapacity.  In cases where the individual does not have an updated estate plan, these can be challenging.  There are court-supervised processes that enable appointed individuals to act on behalf of incapacitated persons. The problems with these proceedings are many.  First, the initial part, determining incapacity, can be trying as it is a public process designed to protect the individual who may be incapacitated.  Normally multiple attorneys are involved to represent all the parties and interests in the case. 

In addition, even after a guardian is appointed, the court stays involved in supervision and this often requires participation of lawyers and other professionals, thus entailing ongoing costs.  Not a pretty picture, but it does allow the person’s assets and affairs to be dealt with by a competent individual.

A much brighter picture is available to those who engage in at least some basic planning.  The key documents for solid outcomes, which are common in many of the plans we produce every month, are:  Revocable Living Trusts, Financial Powers of Attorney and Health Care Powers of Attorney.  The latter two, the powers of attorney, allow a person (the principal) to appoint another (the agent) to bind them legally.  In both cases, you have a good deal of flexibility in customizing the authorization you give the agent.  For example, there may be certain cases or times when you want the agent to act or you may want to limit their ability to authorize certain types of treatment for you.

While not necessarily required to deal with incapacities, a Revocable Living Trust can give your chosen successor the ability to deal with your assets in a fairly seamless manner.  This is true because the Trust can become the owner of the asset at any point after the plan is executed and this means that even after the incapacity, the same owner is still speaking for the asset.  In other words, the Trust owns the asset before and after the incapacity.  Things are different after the incapacity only in the sense that the person who controls the trust (the Trustee) has changed according to the terms of the document.  Normally, such terms will set out a private procedure to determine incapacity (e.g., an exam by the family physician of the person who established the trust.)  The fact that asset ownership stays in the same hands throughout the incapacity can facilitate smooth administration for the persons involved.

If you are interested in learning more about any of these documents or are dealing with issues such as the ones referenced here, please give us a call at (704) 552-5160 or send us an email.

*Intended as general guidance only and not as legal advice.