When most people think about the need for estate planning, they think in terms of planning for the distribution of estate assets after their own death. Creating a roadmap which can be used to pass down your assets is certainly an important part of estate planning; however, there is much more to a comprehensive estate plan. One important addition to a comprehensive estate plan is incapacity planning. Have you ever stopped to consider what would happen if you were incapacitated tomorrow? If not, now is the time to do so and to plan accordingly. To get you started, a living trust lawyer explains how a living trust can be used as an excellent incapacity planning tool.
Incapacity Isn’t Limited to the Elderly
One reason people often fail to include incapacity planning in their estate plan is that they tend to think of incapacity as a problem limited to old age. While it is true that things such as Alzheimer’s disease and other age-related conditions do cause incapacity in the elderly, the reality is that incapacity can occur at any time and can be caused by things such as a tragic accident or a debilitating illness. In fact, you stand a one in five chance of suffering a period of disability lasting longer than five months before you reach retirement age. Regardless of when incapacity strikes, if it does strike, it can wreak havoc.
What Would Happen If You Were Incapacitated Tomorrow?
The best way to understand the need for incapacity planning is to take a minute and consider what might happen if you were incapacitated tomorrow as a result of a serious accident. Can you answer the following questions?
- Who would make healthcare decisions for you?
- Who would make personal decisions, such as where you will live, for you?
- Who would take over control of your finances and pay your bills?
- Who would manage your assets and property while you are unable to do so?
Without an incapacity plan in place, the answer to each of those questions remains unclear. In a worst case scenario, your family members might end up in a protracted legal battle over the right to make decisions for you and/or manage your assets. Not only would this costs a small fortune but it could create a rift in your family that might never mend. The way to avoid this is to make your wishes known now and create the legal framework by which those wishes must be implemented in the event you ever do suffer a period of incapacity.
How Can a Revocable Living Trust Help?
A revocable living trust is a very popular incapacity planning tool for several reasons. As the Settlor of the trust, you create the trust and name yourself as the Trustee. You then name the person you would want to take over control of your assets in the event of your incapacity as the successor Trustee. Assets are then transferred into the trust. As the Trustee, you continue to have access to, and control over, those assets just as you did before creating the trust. If, however, you become incapacitated, your successor Trustee takes over as the Trustee automatically. As the Trustee of the trust, your chosen successor now has control of the trust assets without the need to involve a court or do anything else. Because it is a revocable trust, you also have the ability to move assets in and out of the trust as needed and to replace the successor Trustee with someone else if the need arises. In addition, as the Settlor of the trust, you even have the ability to use the trust terms to define “incapacity” or to set up procedures to be followed to determine under what conditions the successor Trustee should take over as Trustee.
Contact a Living Trust Lawyer
If you have additional questions or concerns about incapacity planning, or you wish to get started creating your revocable living trust, contact an experienced living trust lawyer at German Law Group by calling 701-738-0060 to schedule an appointment.