Planning for Incapacity

Estate planning usually refers to planning for what happens upon your death. Another part of estate planning is planning for your incapacity.

My client Jennifer is the ex-wife of a physician. He is only 54 but recently had a seizure. He was in a coma, and there was even a question of whether he would survive. Now he needs to be moved to a facility for rehabilitation.

The physician, presumably a very smart person, had no plans for incapacity. Decisions need to be made for his care, and there is no one authorized under the law to make those decisions for him. He has no wife – only two ex-wives who no longer care about him (and hate each other). He has three children but they are all minors.

Healthcare Power of Attorney. If he had planned for incapacity, he would have signed a Healthcare Power of Attorney naming someone to act on his behalf to make health care decisions. This power exists only when he is unable, in the judgment of his attending physician, to make those health care decisions.

Guardianship. Without anyone legally authorized to make medical decisions, setting up a guardianship over the physician will be required. A hearing for the guardianship has to be set, the physician has to receive at least 20 days notice, and an attorney has to be appointed by the court to represent him at the hearing. Not an easy or quick process.

Financial Power of Attorney. Again, if he had planned for incapacity, he would have signed a Financial Power of Attorney, naming someone to act on his behalf in financial matters. These powers are general and all-inclusive and include the power to manage all bank accounts, buy and sell assets, including real estate, apply for benefits and participate in government programs, hire and fire professionals. Generally, to perform any financial act that he could do for himself.

When he was first admitted to the hospital, no one was immediately concerned about his financial affairs, but as time goes on, his creditors have become concerned. His ex-wives want child support, his mortgage has to be paid, and long-term care plans need to be made. Does he have disability insurance? Enough assets to pay for nursing home care? Since he has not signed a Financial Power of Attorney, no one has the authority to obtain this information or to take care of these matters.

Conservatorship. Without anyone legally authorized to take care of the physician’s financial matters, setting up a conservatorship will also be required. [Guardianship is for someone who can no longer care for themselves. A conservatorship is for someone who is unable to make, communicate or carry out important decisions concerning their financial affairs.] A petition for a conservatorship can be filed at the same time as the petition for guardianship.

We all need to plan for incapacity. If you don’t have Healthcare and Financial Powers of Attorney, make that a New Year’s Resolution for 2016!

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