﻿ Marc A. Hebert's Money Sense: Though not a pleasant topic, planning for incapacity is necessary | New Hampshire
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April 20. 2018 7:54PM

While no one likes to think about these things, what would happen if you were unable to take care of yourself mentally or physically?

What if you could not make the decisions necessary to manage your health and finances?

What if you became incapacitated?

Incapacity can happen to anyone at any time. Aging may bring on senility, Alzheimer's disease or other illnesses. Accidents can happen at any age. Incapacity can be temporary or permanent.

Unless you are prepared, incapacity could deplete your savings and devastate your finances, not to mention the emotional effects on your family.

Preparation is the key. Consolidate your assets as much a possible by closing unnecessary accounts. Formalize your work. Doing so helps to ensure that your wishes are carried out.

Without this, the courts could be making decisions for you, as a petition might be necessary to determine your status. A good plan can save your family from a variety of legal, financial and personal problems.

Use advance medical directives. There are several types of directives including a living will, a durable power of attorney for health care (health-care proxy), and a do-not-resuscitate order (DNR). Each has its own purpose and the use varies depending on the state you are in.

A living will allows you to grant someone the authority to make life-sustaining or life-ending decisions if the person who signed the document is incapacitated. Most states allow these types of documents when there is a terminal injury or illness involved.

A health care proxy allows you to appoint a trusted representative to make medical decisions for you if you become incapacitated. This includes situations in which the living will does not apply.

A do-not-resuscitate order is a doctor's order that alerts all other medical personnel not to perform CPR if you go into cardiac arrest.

Another key area involves privacy as outlined under the Health Insurance Portability and Accountability Act. A HIPAA Authorization will give your doctor or other health care provider the authority to disclose your medical information to the person you have selected.

Now that we have reviewed the health care side of preparing for incapacity, let's take a look at the financial side. One of the ways to protect your property is to place it in a revocable living trust and designate a financial durable power of attorney.

You can transfer ownership of your property to a revocable living trust and act as trustee. If you become incapacitated, a successor trustee who you have named can step in and take over the management of your property. Trusts can include detailed provisions as to how you want your assets managed. You can resume the duty of trustee if the incapacity passes.

The trust can also contain provisions as to how your status is determined. Incapacity can be determined by one or more physicians or by your own attending physician.

A durable power of attorney for your finances allows you to authorize someone you trust to make financial decisions on your behalf. Depending on state law, it can be effective immediately or only if you become incapacitated.

As can be seen, these things require some time, money and effort. In considering the people you would like to have in various roles think about where they live, how busy they are, and if they have the ability to do the job.

These are documents you will want to revisit periodically to keep them current. See a qualified estate planning attorney to discuss your needs and help you get the necessary documents in place.


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