LLike most people, you probably consider the primary purpose of your estate plan to be to plan for the distribution of your estate assets upon your death. Your goal is likely to ensure that those assets are used to provide for your loved ones after you are gone. What happens, though, if instead of dying you become incapacitated? If that occurs, your Last Will and Testament will not be helpful because the terms of your Will only become relevant after your death. How will you provide for loved ones during your incapacity? Furthermore, who will control your estate assets and who will make decisions for you while you are incapacitated? Incapacity planning will ensure that you know the answers to these questions and others.
What Are The Odds You Will Become Incapacitated?
You may not have given much thought to the possibility of your own incapacitation because, like many people, you may associate incapacity with old age. Consider, however, the following facts and figures relating to incapacity:
• Alzheimer’s, and other age related dementia diseases, are not the only causes of incapacity.
• Incapacity can last a few days, a few months, or a lifetime.
• Incapacity can strike anyone at any time as a result of a workplace accident, severe illness, or even a catastrophic car accident.
• 1 in 4 of today’s 20 year olds will suffer a period of incapacity before they retire.
• More than 50 % of America’s “disabled” are in their working years
• A healthy 35 year old female stands a 24% chance of becoming disabled for 3 months or longer during her working career.
• A healthy 35 year old male stands a 21% chance of becoming disabled for 3 months or longer during his working career.
• At age 65, you stand a 50-50 chance of needing long-term care before you die.
• At age 85, those odds jump to a 75% chance.
Is a Power of Attorney the Best Incapacity Planning Tool?
A power of attorney is a legal agreement whereby a Principal (in this case, you) grants an Agent, (the person you wish to give authority to) the power to act on behalf of the Principal in legal matters. A power of attorney, or POA, can be general or specific. A specific POA limits the Agent to acting within only power outlined in the POA agreement. A general POA, however, gives the Agent almost unlimited power to act on behalf of the Principal. In the past, even a general POA automatically terminated upon the death or incapacity of the Principal. Of course, for many people, the sole purpose of granting someone power of attorney was so that the Agent could act on their behalf in the event of their incapacity. For this reason, the concept of a durable power of attorney eventually developed. A durable POA survives the incapacity of the Principal. Therefore, if you plan to use a power of attorney as an incapacity planning tool, be certain your POA is a durable POA. The POA Documents provided by Nash Nash Bean & Ford are durable powers of attorney.
Although a durable POA can be an effective incapacity planning tool, it has some limitations that often prevent it from being the best incapacity planning tool available. Even a durable general POA cannot be used to make medical decisions for an Agent in most states, for example. In addition, it can be cumbersome for an Agent to have to prove that he or she has Agent authority every time the POA needs to be used. For these reasons, you may need to also execute an advanced directive giving someone the authority to make healthcare decisions for you. You may also wish to consider establishing a revocable living trust in lieu of a power of attorney to give someone the authority to control your assets should you become incapacitated. Talk to your Illinois estate planning attorney at Nash Nash Bean & Ford about your incapacity planning options to ensure that your plan is right for you.
For more information, please join us for one of our upcoming free seminars. If you have additional questions or concerns about incapacity planning or how a power of attorney can work in your plan, contact the experienced Illinois estate planning attorneys at Nash, Nash, Bean & Ford, LLP by calling 309-944-2188 to schedule your appointment today.