Estate Planning is not just about Wills and Trusts. Having a plan in place to govern your health and finances if you are living but incapacitated, Incapacity Estate Planning, is important as well. What does it mean to be incapacitated? Being incapacitated means that you cannot effectively manage your property or financial affairs because of age, illness, mental disorder, dependence on prescription medication or other substances, or any other cause. Incapacity may be temporary or permanent, and having a plan in place to protect your finances and your health is important.
What happens with my finances if I am incapacitated?
- For assets held in your individual name:
- Create a Financial Power of Attorney. A Financial Power of Attorney, or FPOA, names an agent that manages any assets held in your name, pays your bills, and generally handles your financial affairs. The law recently changed, in 2017, so that a FPOA must be accepted by a financial institution and cannot become invalid because it is too old, or not on the form that financial institution prefers. Your FPOA may be effective immediately, or only become effective upon your incapacity. See our Article on Financial Power of Attorney from July 3, 2018 for more information: https://grissomlawfirm.com/georgia-statutory-power-of-attorney/
- If you have created a Revocable Trust, then any assets you have retitled into your Trust are controlled by your Trustee. Generally, the Trustee has certain requirements on what they must pay and what they cannot pay, including providing for you. There is no Court proceeding needed so it is a more seamless transition.
- Unlike an FPOA, a Trust doesn’t expire and isn’t rejected because it was executed too long ago. Even if laws change, your Trust is still good as long as you have not revoked it.
Many people think they do not need a FPOA because they have a Will, but a Will is not used during incapacity. A Will only helps if you are deceased. Other clients have tried to avoid the issue by naming joint owners on their accounts and real estate, but jointly owned property doesn’t necessary avoid the problem either – real property, for example, requires all owners to sign (or an agent to sign on behalf of a party).
So, what happens if you don’t have a Financial Power of Attorney or a Trust? If you don’t have an agent or a Trustee, then family or friends can petition the court to appoint a guardian and conservator who will manage your finances and act as the responsible party for your care. However, court intervention is expensive (legal fees, court costs, filing fees), and time consuming. Additionally, once someone is appointed as a custodian and guardian, they must then report to the court on an ongoing basis.
Who makes decisions about my health care?
- A Health Care Directive allows you to appoint an agent who would have the right to your medical information and would make medical decisions for you. The Health Care Directive also states your wishes on what kind of health care you wish to receive if you are unconscious or incapacitated and cannot communicate your preferences. See our article on the Advanced Directive for Healthcare for more information: https://grissomlawfirm.com/wills-overview-health-care-directive/
We work with individuals and families developing estate plans. Each individual’s needs are unique and this article only addresses a portion of estate planning. For more detailed information and to discuss your specific case, call us today at (678)781-9230 to schedule an appointment.
Disclaimer
This Blog/Web Site is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide legal advice. By using this blog site you understand that there is no attorney client relationship between you and Grissom Law, LLC.