Incapacity Planning – It’s all in the Details

Mar 6, 2015 11:09:00 AM

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A client who experiences a critically disabling event has to navigate and manage many obstacles, both physical and emotional. One question, however, that an incapacitated client should not have to ask is “Who will see that my estate continues to be well managed and that my wishes will be followed?” 

With careful planning, a client can be sure that safeguards are in place to provide continuity in the management of his or her estate. In the Revocable Living Trust, incapacity provisions can be added, granting the Durable Power of Attorney for Property specific duties and responsibilities while the client is incapacitated. In this way, a client is able to appoint a person they trust and assign them precise duties. Without these  provisions, there is a high probability that temporary guardianship or conservatorship would be appointed through the probate court process. In the absence of a clear client directive, this probate court (often referred to as “Living Probate”) is there to protect the incapacitated client’s interests; however, the process can be costly, time-consuming and, best intentions notwithstanding, the court’s appointment of a guardian/conservator may not be well attuned to the client’s wishes.

In planning for incapacity, it is always a question of balance between two objectives: empowering the appointed guardian (agent) and protecting the interests of the principal (client). How to achieve the proper balance? It’s in the details and specificity is key. As an estate planning professional, you want to empower the agent to make decisions for the client with the least amount of delay. You also want to establish all appropriate limits to that power. This may include, for example, the appointment of a committee that can review the guardian’s decisions to assure that they are consistent with the client’s wishes. You also want to be sure that the client’s condition of incapacity is carefully and appropriately evaluated (e.g., “upon written review of two physicians”). As in most estate planning considerations, there is not a single solution for incapacity planning. Guide the discussion with your client to determine his or her priorities and most compelling needs. Then tailor a plan for incapacity that  successfully balances the twin goals of empowering the agent and protecting the client.

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