People don’t always make Estate Planning a priority. Thinking about death can be difficult, and it often raises uncomfortable questions about the best way to divide assets between children, relatives, and family friends. However, you can use your Estate Plan to do much more than make decisions about inheritance. With the right structure, your plan can help protect you—and those who matter most—from the threat of an unexpected accident or life-threatening illness.
Read more to learn about making incapacity planning a part of your Estate Plan, or contact Ross & Shoalmire today to speak to an attorney and schedule your initial consultation.
Understanding the Risk of Incapacity
An estate plan is simply a set of instructions that tells your executor and family members how to redistribute and manage your assets upon your death or in the event of incapacity. Every Estate Plan is different, but most include components like:
- A last will and testament
- Letters of intent
- Asset protection strategies like living trusts
- Lists of beneficiary designations and life insurance policies
Most Estate Plans are geared toward protecting a deceased person’s assets from creditor claims and the possibility of probate litigation. Ideally, though, an estate plan—no matter its size or complexity—should also detail how your health, wealth, and assets should be managed if you are ever seriously injured in an accident or diagnosed with a debilitating medical condition like Alzheimer’s disease or dementia.
In the absence of a rock-solid plan, your family members may have to go to court to protect your interests. Some of the biggest risks of incapacity include, but are not limited to, the following:
Intestate Succession
If you don’t already have a will, a trust, or other estate plan, you risk dying intestate.
In Texas and Arkansas, a person who passes away without an estate plan is said to have died “intestate.” During an intestate succession, a probate court will choose your estate beneficiaries using a stringent legal formula. This formula prioritizes your immediate family members to the detriment of everyone else you may have wished to inherit.
Family Disputes
People sometimes lose their ability to make medical and financial decisions.
Lawyers sometimes refer to this ability as “legal capacity.” If you are incapacitated and unable to make decisions independently, whether because you are sick or seriously injured, you may not have the capacity to consent to medical treatment or authorize a relative to access and manage your financial accounts.
Your family members may be able to petition a court for permission to make decisions on your behalf, but they may disagree on the best course of action. Even if all of your relatives are committed to your recovery, disagreements can make it much more difficult for doctors to do their job.
Health Care Delays and Financial Uncertainty
You can use your estate plan to nominate a health care proxy—but without a plan in place, your family will most likely have to petition a court to act on your behalf. Obtaining a court order can take days or weeks, potentially delaying critical treatment.
Similarly, without delegating powers of attorney, your family won’t be able to use your money to pay your rent, keep your mortgage current, or otherwise prevent your finances from collapsing while you’re in the hospital.
5 Ways to Protect Your Health, Wealth, and Family from Incapacity
You don’t have to take chances with your health, wealth, and family. Instead, you can put your estate plan to work by:
1. Making the Most of Your Last Will and Testament
Writing a last will and testament is the easiest and most effective way to minimize the risk of an intestate succession. However, your will can serve a purpose beyond listing assets and naming heirs. In both Texas and Arkansas, you can use a last will and testament to:
- Name an executor
- Nominate a guardian for your minor children
- Provide instructions for your funeral and burial
2. Creating a Health Care Directive
A health care directive, sometimes termed a “living will” or “advance directive,” is a legal document that details your preferences for medical treatment and end-of-life care.
You can use a living will to:
- Explain what steps should be taken if you are ever critically incapacitated
- Pre-emptively approve or reject certain types of medical treatment
- Tell your family when, if ever, you should be taken off life support if your doctors do not believe you’re likely to recover
Some hospitals provide living will templates, but it’s typically best to have a plan before catastrophe strikes. Aside from the possibility that illness or an accident could make it impossible to approve a living will, many templates won’t work in different states or in other medical facilities.
3. Delegating Powers of Attorney
A Power of Attorney is a legally-binding document that lets another person act on your behalf, and in your best interest, after certain conditions have been met. Different powers of attorney exist, and they all serve very different purposes. Some of the most common include:
- The general Power of Attorney gives a person the power to act for you, the “principal,” in all business and personal matters.
- The limited Power of Attorney limits your agent’s authority to the powers detailed in your power of attorney document.
- The springing Power of Attorney, which only takes effect after you have become incapacitated.
Some powers of attorney can be further adjusted and limited. For example, you may be able to use your living will to delegate a “health care power of attorney,” which lets a trusted individual make decisions about medical treatment without granting access to your financial accounts.
4. Establishing a Trust
Trusts are a distinct form of legal relationship between several different parties. These include:
- The grantor, who establishes the trust and provides its funding.
- The trustee, who controls and manages trust assets. If you establish a revocable living trust, you may be able to act as trustee for the duration of your own lifetime. After you pass away, a designated successor trustee will administer the trust in your place.
- The beneficiary, who receives distributions from the trust. The trustee and successor trustee have a legal responsibility, termed a “fiduciary duty,” to manage trust assets in and for the best interest of the beneficiary.
Trusts can offer significant advantages over conventional wills and testaments.
You can, for instance, use a trust to avoid probate on most trust-controlled assets. Furthermore, whereas probate is a time-sensitive process that must be completed on a set schedule, trusts can remain in effect for as long as they have funding.
Trusts are also very customizable. Instead of providing a one-time, lump-sum inheritance, you can set conditions on how, when, and where distributions are made. This could help protect your family from incapacity should you pass away unexpectedly and wish to leave assets to a minor child or spendthrift relative.
5. Contacting an Experienced Texarkana Estate Planning Lawyer
You can’t predict the future, but an estate planning lawyer could help you reduce the risk of a life-altering illness or injury.
Ross & Shoalmire, Elder Law Attorneys, have spent years helping families in Texas and Arkansas shield themselves from uncertainty. We could help you, too. Our experienced team of Estate Planning Attorneys could work with you to:
- Create an Estate Plan that keeps you safe from the threat of incapacity
- Review or revise an existing Estate Plan to accommodate big life events, like a marriage, divorce, or birth
- Talk through your concerns about choosing a guardian or an executor
- Discussing your priorities and aspirations to see what type of Estate Plan makes the most sense for you
Our priority is ensuring that you, and your family, feel confident—no matter where life takes you, and no matter what the future holds.
