It’s easy to consider incapacity planning as an age-related concern; however, it is not just the elderly who are at risk for becoming incapacitated. On the contrary, a tragic car accident, a debilitating illness, or even a work related injury could all result in a period of incapacity at any age. Most people are surprised to learn that a typical 35 year-old has a about a one in four chance of becoming disabled for 3 months or longer during his/her working career. That same worker has a 38 percent chance that if disabled, that disability will last for five years or longer. The threat of becoming incapacitated, therefore, is something everyone should plan for within their estate plan regardless of their age.
It doesn’t matter if you are wealthy or have only a modest estate, you undoubtedly care what happens to the assets you own. Moreover, you are accustomed to controlling what happens to those assets; however, if you were to become incapacitated tomorrow, someone would have to take over control of the assets you own. In the absence of an incapacity plan that dictates who that person will be, you have no way of knowing who will end up in control of your assets. Making matters worse is the very real possibility that several different people might want to be in charge of your assets which all too often results in protracted litigation.
For many people, the most powerful incentive for creating an incapacity plan is the chance that someone not of their choosing could end up making medical decision for them. If you become incapacitated, someone may need to make life and death medical decisions for you if you cannot make them yourself. In the absence of an incapacity plan that makes it clear who you designate to make those decisions, a court may need to appoint someone – and it might not be someone you want to be making those decisions. In addition, if more than one person believes that they have the right to make those decisions for you it could once again lead to contentious litigation and a family rift that may never heal.
Incapacity planning utilizes legal strategies and tools that collectively determine who will control your assets and make important decisions for you in the event you are ever incapacitated. It allows you to make crucial decisions now instead of a judge making them for you later.
A Power of Attorney is a legal agreement that allows you (the “Principal”) to grant another person (your “Agent”) the legal authority to act in your place in legal matters. That authority can be general, allowing your Agent almost unfettered power to act on your behalf, or limited, only granting your Agent the authority to act on your behalf in specific situations or for a designated period of time. If you make any Power of Attorney durable it means that the authority granted to the Agent will survive the incapacity of the Principal. While a Power of Attorney can be a helpful incapacity planning tool, it has some drawbacks, including the risk that third parties won’t accept your Agent’s authority as well as the possibility that you will grant too much, or too little authority to your Agent.
One of the most popular incapacity planning tools is a revocable living trust. When used to help plan for the possibility of incapacity, a revocable living trust works by allowing you to appoint yourself as the Trustee of the trust and appoint someone of your choosing as the successor Trustee. Your estate assets are then transferred into the trust. Because you are the Trustee, you continue to control those assets just as before; however, if you become incapacitated the successor Trustee (chosen by you) takes over as Trustee, thereby shifting control of your assets to the person of your choice without the need for court intervention. Moreover, when you recover you can resume your position as Trustee as if nothing happened. Finally, because the trust is revocable, you can move assets in and out of the trust with ease and even replace the successor Trustee if you wish to do so at any time.
An advance directive is a legal document that enables you to plan for and communicate your end-of-life wishes in the event that you are unable to communicate those wishes at some point in the future. State law dictates what types of advance directives are recognized in the state. New York recognizes two types of advanced directives, including:
- New York Health Care Proxy Form – lets you appoint a health care agent — someone you trust to make health care decisions for you if you are unable to make decisions for yourself.
- New York Living Will — allows you to leave written instructions that explain your health care wishes, especially about end-of-life care. This document becomes effective when you are unable to make your own decisions, and your doctor confirms that you have an incurable condition. You cannot use a Living Will to name a health care agent; you must use a Health Care Proxy form.
- Medical Orders for Life Sustaining Treatment (MOLST) — allows doctors to record your preferences regarding cardiopulmonary resuscitation (CPR), mechanical intervention, and other life sustaining treatments on one form as a physician order. It must be completed by a health care professional and signed by a New York State licensed physician to be valid.
If you have specific questions regarding incapacity planning, contact an experienced incapacity planning attorney at the Law Offices of Kobrick & Moccia by calling 800-295-1917 to schedule your appointment.