At its core, estate planning is the process of ensuring that your loved ones receive your stuff after you pass away. At the same time, we must also address the realities of aging. How do we do that as part of an effective estate plan?
Aging and Incapacity
There is a life expectancy calculator on the Social Security Administration website. Let’s say you plug in the information for a man who is turning 67 today. How long can he expect to live? The life expectancy there is 85 for this man, or 87 years for a woman.
You probably know that you will qualify for Social Security when you are between 66 and 67 years old (depending on the year of your birth). When you combine these two facts, you can see that your life expectancy is at least 85 years if you expect to live long enough to collect your full Social Security benefit.
What does this mean in terms of the potential for mental incapacity later in life?
The Alzheimer’s Association collects a great deal of information. According to research that they cite, some 32 percent of people that are 85 years of age and older have contracted this disease. The figure is 10 percent for all senior citizens, which is a rather sobering revelation.
Many people with Alzheimer’s-induced dementia become unable to handle their own affairs, and there are numerous other causes of cognitive impairment beyond this single disease. We don’t mean to scare you, but we hope this provides context for our emphasis on incapacity planning.
What if you do nothing– zero, zip, zilch– to prepare for possible incapacity? In this case, the state could be petitioned to appoint a guardian to act on your behalf. You could become a ward. Although this is a necessary safeguard within our legal system, most people are uncomfortable leaving their future up to the state and would prefer to choose their own representatives and advocates.
Another drawback of a guardianship is potential disagreements within a family regarding the correct course of action. These hard feelings tend to fester and spring up again during difficult times when a person’s children and grandchildren should be uniting and helping one another.
Living Trust and Durable Power of Attorney
What can we do about this? You can take destiny into your own hands if you include an incapacity component within your broader estate plan. A living trust is the ideal estate planning centerpiece for a wide range of people, and it provides many benefits that a simple will cannot deliver.
When you have this type of trust, you act as the trustee (manager) while you are alive and well. You retain complete control of the assets. In the trust declaration itself you can name a disability trustee to assume the role should such intervention ever become necessary.
If you do not have a trust, you can still execute a durable power of attorney for property. This document gives the agent you’ve named the ability to act as your representative in the event of your incapacity.
Even if you do have a living trust, it’s still wise to craft a durable power of attorney for property to account for assets that were accidentally left out of the trust.
Advance Directives for Health Care
It’s a good idea to round out your overall estate plan with advance directives regarding your care.
One of these directives is a living will, which is a document that you use to record your life-support choices. Do you wish to be kept alive by artificial means? You may specify that in this document. You can also include organ and tissue donation designations and comfort care medication preferences.
Medical related situations can arise when you are unable to communicate that are not related to the use of life-support. As a response, you should add a durable power of attorney for health care decision-making.
Due to restrictions contained within the Health Insurance Portability and Accountability Act (HIPAA), doctors are not allowed to discuss medical conditions with anyone other than the patient. Your incapacity plan should include a HIPAA release that gives your health care agent the ability to communicate freely with your physicians.
Schedule a Consultation Today!
Today is the day for action if you are going through life without incapacity planning. Once disaster strikes, there is relatively little we can do – “an ounce of prevention is worth a pound of cure.” You can schedule an appointment by calling us at (512) 258-9455, or you can fill out our contact form online.