Incapacity planning is an essential piece of the puzzle when you are devising a long-term plan for aging. Many elders become unable to make sound decisions at some point in time, and you can account for this through the execution of a certain type of power of attorney.
You are probably aware of the fact that a power of attorney is a legally binding document that can be used to give another person the power to act on your behalf. A standard power of attorney would no longer be in effect if the grantor of the power was to become incapacitated.
To account for this, you would use a durable power of attorney to name someone to act on your behalf in the event of your incapacitation, because a durable power of attorney would remain in effect.
Though a durable power of attorney can be an effective incapacity planning tool, there are some potential disadvantages to take into consideration. For one, if you execute a durable power of attorney, you would probably want it to be effective right away, because you want to prepare yourself for unexpected circumstances.
However, on the downside, you would be giving the agent the power to act on your behalf even while you are perfectly capable of handling your affairs. To account for this, you could potentially create the document without letting the agent know about it at first. Perhaps your attorney could hold the power of attorney for safekeeping, and the agent could be informed if and when it becomes appropriate.
Another possibility would be the creation of a springing durable power of attorney. This document would only go into effect if you were to become incapacitated.
Another limitation that is not entirely positive is the fact that a power of attorney would terminate upon the death of the grantor. If you use a durable power of attorney to account for incapacity, your agent would be well positioned to administer your estate, but he or she would not have the power to serve as the estate administrator.
It would be possible to use a revocable living trust as the centerpiece of your estate plan. If you were to create a living trust, you would name a successor trustee to administer the trust after your passing. You could also empower the successor trustee to administer the trust in the event of your incapacitation, so a revocable living trust could provide multiple benefits.
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We can help if you would like to learn more about incapacity planning, powers of attorney, and living trusts. To set up a consultation, send us a message through this page: Sacramento CA Estate Planning Attorneys.