The idea of needing someone else to make financial decisions for you can be unsettling. However, if you’re ill or injured and unable to make decisions, you want to ensure making those decisions falls to someone you trust, making incapacity planning invaluable. Beyond ensuring your healthcare wishes, you can also make financial arrangements. However, you may need many documents ready and available in the event of incapacity.
Documents You Need for Financial Management in Incapacity Planning
Durable Power of Attorney
A durable power of attorney (DPOA) is key to financial planning for incapacity. A DPOA is a legal document authorizing an individual to act as your agent in financial matters when you cannot do so. Unlike a standard POA, a DPOA will stay in effect in the event of incapacity, ensuring a more seamless transition.
With a DPOA, your agent can handle tasks like paying bills, managing investments, filing taxes, and overseeing real estate transactions. You’ll also give this person access to sensitive information and financial accounts. That’s why you must choose a person who is trustworthy and responsible.
Revocable Living Trust
With a revocable living trust, you have an estate planning tool for asset management during incapacity. Unlike a will, which only takes effect after your death, a revocable trust is active during your lifetime. That allows you to retain control over assets, but you can designate a successor trustee to step in if necessary.
If you can’t make decisions or handle finances, the successor trustee can take over these responsibilities. They could manage investments, pay bills, oversee properties, and more. Additionally, the trust keeps your affairs private and allows your loved ones to avoid the delays and expenses of probate. It also offers flexibility since you can modify or revoke the trust while still capable.
Other Estate Planning Measures
Incapacity often precedes death, making it essential to have your estate planning documents in place. Key documents include wills, beneficiary designations, and payable-on-death (POD) designations.
A will ensures the correct distribution of assets upon your death. Beneficiary designations for retirement accounts and insurance policies are also vital. Similarly, POD designations allow bank accounts to transfer directly to named individuals. Creating and updating these documents is essential to ensure a smooth process for loved ones.
These documents can ensure sound financial management when you can’t make decisions. In part two of this post, we’ll cover documents you should organize and have available as part of incapacity planning. Seniors should also consult an attorney for assistance with creating documents and making financial arrangements.
Do you need help with incapacity planning? Click here to contact the Scott Law Offices. Our estate planning attorneys can advise and help you make the necessary arrangements. Reach out now to learn more.
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