Yes, you do. In fact, if you are relatively young and healthy you probably need to be more worried about a period of incapacity than you do death. Up to about age 40 you are three times more likely to become incapacitated than you are to die. One in four of today’s 20-year-olds can expect to be out of work for at least a year because of a disabling condition before they reach retirement age. Because you undoubtedly care what happens to you and your assets if incapacity does strike, it is imperative that you plan for that possibility.
On a daily basis, you control what happens to your assets; however, if you were to become incapacitated tomorrow someone would have to take over control of those assets. In the absence of an incapacity plan that dictates who that person will be, you have no way of knowing who will end up in control of your assets. More than one person could feel that they have the right to step in and take control, resulting in costly litigation.
Many people fail to plan for incapacity because they mistakenly believe this to be the case. The reality is that even if you are married there is no guarantee that it will be your spouse or a family member making serious, even life or death, healthcare decisions for you if you are unable to make them. Sometimes, more than one family member believes that he/she should be the one making those decisions, The result is a court battle that could result in a family feud that leaves the family divided.
Incapacity planning utilizes legal strategies and tools that collectively determine who will control your assets and make important decisions for you in the event you are ever incapacitated. It allows you to make crucial decisions now instead of a judge making them for you later.
A Power of Attorney is a legal agreement that allows you (the “Principal”) to grant another person (your “Agent”) the legal authority to act in your place in legal matters. That authority can be general, allowing your Agent almost unfettered power to act on your behalf, or limited, only granting your Agent the authority to act on your behalf in specific situations or for a designated period of time. While a Power of Attorney can be a helpful incapacity planning tool, it has some drawbacks, including the risk that third parties won’t accept your Agent’s authority.
An advance directive is a legal document that allows you to plan ahead and make your own end-of life wishes known in the event that you are unable to communicate those wishes at some later time and/or appoint someone to make decisions for you. State law dictates what types of advance directives are recognized in the state. North Dakota recognizes two types of advanced directives, including:
- Power of Attorney for Health Care which allows you to appoint someone as your Agent to make health care decisions for you, including those involving life-sustaining treatment, in the event you are unable to make them yourself because of you incapacity at some point in the future.
- Health Care Instructions which is North Dakota’s version of a Living Will. In this you can state your wishes with regard to health care in the event you can no longer speak for yourself.
A revocable living trust is often used in an incapacity plan. When used to help plan for the possibility of incapacity, a revocable living trust works by allowing you to appoint yourself as the Trustee of the trust and appoint someone of your choosing as the successor Trustee. Your estate assets are then transferred into the trust. Because you are the Trustee, you continue to control those assets just as before; however, if you become incapacitated the successor Trustee (chosen by you) takes over as Trustee, thereby shifting control of your assets to the person of your choice without the need for court intervention. Moreover, when you recover you can resume your position as Trustee as if nothing happened. Finally, because the trust is revocable, you can move assets in and out of the trust with ease and even replace the successor Trustee if you wish to do so at any time.
If you have a loved one who has become incapacitated, as a result of Alzheimer’s or simply the natural aging process, seeking guardianship may be your only option if you wish to keep them and their assets safe. A guardianship is a relationship established by a court of law between the person who needs help, referred to as the “ward,” and the person or entity named by the court to help the ward, known as the “Guardian.” Considered the option of last resort because of its restrictive nature, courts will only approve a guardianship if convinced it is absolutely necessary. If you find yourself worried about a loved one, consult with an experienced guardianship attorney about your legal options.
If you have additional question or concerns regarding how to incorporate incapacity planning into your overall estate plan, contact the experienced North Dakota estate planning attorneys at German Law Group by calling 701-738-0060 to schedule an appointment.