Preparing for incapacity is never something we want to think about, and if we are not thinking about it, chances are we are not planning for it either.
Many people don’t plan for financial incapacity, because they think “It won’t happen to me” or they just do not want to face the fact that as we age, our health declines and situations change. Unfortunately, it just takes one sudden injury, or an onset of an illness, for a person to become incapacitated.
An incapacitated person is an adult who has been found to be incapable of receiving and evaluating information for themselves without the assistance of a guardian or caregiver. An incapacitated person may, for example, have a medical condition such as Alzheimer’s or dementia, which may limit their ability to make reasoned decisions, care for themselves, or handle their financial matters.
As we age, the likelihood of needing someone else who is capable of handling our affairs, whether they are financial or medical matters, becomes much more important, hence the old adage “It’s better to be safe than sorry.” Although most of us don’t plan on becoming an incapacitated person, if the time comes that you are unable to make decisions for yourself, regarding your finances and/or health care, being prepared gives you the power to not only name an agent to manage your affairs, but also to tailor the authority of the agent to meet your needs and wishes should the situation arise.
There are many things that go into planning for incapacity. To get started, ask yourself some basic questions, such as:
- Who do I want as my advocate to make decisions when I am no longer able?
- Who do I want to manage my financial affairs if I become incapacitated?
- Are there any specific powers that I would or would not want my agent to have?
- When do I want my agent’s authority to begin?
- Who do I want to make my health care decisions if I cannot?
- What type of care do I want?
- How comfortable do I want to be?
- Are there circumstances where I would not wish to be kept alive?
- Have I clearly communicated my wishes with my family?
Once you have answered these questions, you have the foundation for a plan. You will then want to make an appointment with your financial advisor who will work with you to outline your current financial situation, review your goals and help you develop a plan to achieve them. In the event you become an incapacitated person, having an updated financial roadmap will give whoever is in charge of managing your finances a better idea of how to manage them correctly according to your wishes.
In addition, you will want to see an attorney to help you decide what tools you need to implement your plan. For example, what type of power of attorney would work best for your situation? Should you have a living will, an advance directive regarding health care and end-of-life decisions, or a combination of both? Once you have prepared your documents, you should review them periodically to make sure they are up to date, and keep clean, legible copies in a safe place and make sure that your family knows where to find them. You may even want to provide a copy to your agent and/or other family members.
Whatever the cause may be, incapacity can be tremendously stressful to everyone involved. Simple planning can help reduce this stress by allowing for the seamless management of finances and providing guidance on health care decisions. Coming up with a plan now is a great step in the right direction.
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