In the world of finances, the law, and incapacity planning, you are typically “incapacitated” if you are unable to manage your finances and day to day business affairs. Regardless of whether you have participated in the estate planning process, incapacity planning is an important element.
If you become incapacitated for a period of time or permanently, you will need trusted helpers to act on your behalf. If you’ve done estate planning, you get to choose your trusted helpers and give them instruction on how you want your finances and personal care managed.
If you haven’t done estate planning, the court will decide through a guardianship proceeding who will manage your finances (“guardian of the estate”) and who will arrange for and choose your personal care (“guardian of the person.”)
To avoid guardianship which is public, expensive, stressful, and time consuming, you need two agents appointed in your powers of attorney.
Part of incapacity planning is the appointment of an agent under a financial power of attorney. A power of attorney is used if you are unable to act or if it is more convenient for someone to act on your behalf. The agent pays bills; manages investments; deals with the mail, utility companies, the landlord, real estate, estate planning, gifts, and the like. Power of attorney documents typically have an entire laundry list of authorized actions.
Incapacity planning also includes the appointment of an agent under a medical power of attorney. A medical power of attorney is used to give informed consent and make medical decisions if you are unable to make those medical decisions yourself. The medical power of attorney does not financial decisions other than the authorization of medical care (and medical care costs money.)
If you have any questions about incapacity planning, consult with a qualified estate planning attorney.