Estate planning should cover more than just the disposition of your estate assets when you are gone. A well-rounded estate plan should also help you plan for the possibility of your incapacity or disability. By including a disability planning component to your comprehensive estate plan, you can rest assured that you, your assets, and your loved ones will be protected should disability strike. To better help you understand the importance of disability planning, the disability planning staff at the Northern California Center for Estate Planning & Elder Law discusses how disability planning fits into your estate plan.
Disability Facts and Figures
Disability planning can only help you if you include it in your estate plan. The problem is that people often fail to do that because they perceive the odds of becoming disabled as very low when, in fact, the odds are much higher than they realize. Consider some of the following disability facts and figures:
- Over 37 million Americans are classified as disabled; about 12% of the total population.
- More than 50% of those disabled Americans are in their working years, from 18-64.
- Just over 1 in 4 of today’s 20-year-olds will become disabled before they retire.
- A typical, healthy 35-year-old female has a 24% chance of becoming disabled for 3 months or longer during her working career.
- A typical, healthy, 35-year-old male has a 21% chance of becoming disabled for 3 months or longer during his working career.
- That same man also has a 38% chance that the disability would last 5 years or longer and can expect that the average disability for someone like him will last 82 months.
What Does Disability Planning Include?
There is a very real possibility that you will suffer a period of disability at some point in your lifetime. If that happens, and your disability is severe enough to cause incapacity, do you know the answers to the following questions?
- Who would make medical decisions for you during your incapacity?
- Who would take over control of your assets and your finances during your incapacity?
- Who would make day to day decisions for you, such as where you will live, while you are incapacitated?
- Who will care for your minor children during your incapacity?
In the absence of a disability planning component in your estate plan, the answers to those questions could end up being decided by a judge in a court of law. Instead of allowing that to happen, you might want to incorporate some of the following disability planning tools into your estate plan:
- Advanced directives – an advanced directive can give someone of your choosing the right to make healthcare decisions on your behalf in the event you are unable to make them yourself due to your incapacity.
- Power of attorney – a power of attorney allows you to grant an Agent specific or general authority to act on your behalf in legal matters. For the POA to work during your incapacity you must make the POA durable.
- Revocable living trust – a revocable living trust works as an incapacity planning tool by allowing you to create a trust and appoint yourself as the Trustee and someone else as the successor Trustee. You continue to control the trust assets as long as you are able to do so. Upon your incapacity, control over the trust assets will automatically shift to your chosen successor without the need for court intervention.
Please download our FREE estate planning checklist. If you have additional questions or concerns about disability planning within your estate plan, contact the disability planning staff at the Northern California Center for Estate Planning & Elder Law by calling (916)-437-3500 or by filling out our online contact form.