When you think about the need for an estate plan you probably focus on what will happen to your estate assets after your death. While planning for your eventual death is certainly one important aspect of estate planning, it is not the only reason to have an estate plan in place. The possibility of becoming incapacitated is another important reason. The incapacity planning attorneys at German Law Group explain how incapacity is defined and what you can do now to plan for the possibility of your own incapacity in the future.
Incapacity Is Not Limited to the Elderly
All too often, when people think about the possibility of becoming incapacitated they immediately associate that possibility with old age. While the natural aging process itself, helped along by conditions such as Alzheimer’s disease, can result in incapacity, you don’t have to be a senior to end up incapacitated. On the contrary, incapacity can strike anyone at any age as a result of a workplace injury, a serious illness, or even a car crash. To help you understand the need to plan for the possibility of your own incapacity, consider the following facts and figures:
- Just over 1 in 4 of today’s 20 year-olds will become disabled before they retire
- In December of 2012, there were over 2.5 million disabled workers in their 20s, 30s, and 40s receiving SSDI benefits.
- A typical 35-year-old has a 24% chance of becoming disabled for 3 months or longer during his/her working career.
- Moreover, that same worker has a 38% chance that the disability would last 5 years or longer, with the average disability for someone like him/her lasting 82 months
- Stroke is a leading cause of long-term disability
- 34% of people hospitalized in 2009 for stroke were younger than 65 years of age
How Does the Law Define Incapacity?
North Dakota Century Code 30.1-26-01. (5-101) defines incapacity as follows:
“Incapacitated person” means any adult person who is impaired by reason of mental illness, mental deficiency, physical illness or disability, or chemical dependency to the extent that the person lacks the capacity to make or communicate responsible decisions concerning that person’s matters of residence, education, medical treatment, legal affairs, vocation, finance, or other matters, or which incapacity endangers the person’s health or safety.”
The definition of incapacity found above is used when determining if an adult is in need of a guardian. When an adult is found to be incapacitated, and that possibility was not contemplated ahead of time, a court may be forced to appoint a guardian to make decisions for the incapacitated person and/or take control of the individual’s assets. Understandably, most people would prefer to choose who they wish to make decisions for them and control their assets instead of leaving it up to a court; however, if you failed to plan for the possibility of incapacity, a court may be forced to intervene.
How Can Incapacity Planning Help?
The best way to avoid becoming the subject of a guardianship petition at some point in the future is to incorporate incapacity planning tools and strategies into your estate plan now. One of the most popular incapacity planning tools is a revocable living trust. If you decide to use a revocable living trust in your incapacity plan, you will appoint yourself as the Trustee of the trust and appoint the person you wish to take over control of your assets as your Successor Trustee. Major estate assets are then transferred into the trust and you continue to manage and control those assets as the Trustee as long as you are able to do so. If, however, you ever become incapacitated, control over the trust shifts automatically to your designated Successor Trustee, without the need for court intervention or approval. Your chosen successor then controls all trust assets during your incapacity.
You may also decide to execute an advance directive known in North Dakota as a Power of Attorney for Health Care. This document allows you to appoint an Agent to make medical decisions for you if you are unable to make them yourself. Like with a revocable living trust for your assets, a Power of Attorney for Health Care lets you decide ahead of time who will take over during a period of incapacity instead of a court intervening out of necessity.
Contact a North Dakota Incapacity Planning Attorney
Please join us for an upcoming FREE seminar. If you have additional questions or concerns about incapacity planning, contact a North Dakota incapacity planning attorney at German Law Group by calling 701-738-0060 to schedule an appointment.