Although most of us think about estate planning in terms of distributing our assets after we pass away, this is far from the only function of an estate plan. One important, yet often overlooked, reason to create an estate plan is to prepare for what would happen if you were to become mentally incapacitated.
Mental incapacitation, whether from an accident, injury, or illness, leaves you unable to make important decisions about your medical care and your financial well being. If you have not prepared an incapacity plan, the court will step in and appoint someone to make these decisions on your behalf.
For financial planning, you must have a financial power of attorney form prepared to give the person of your choice the authority to pay your bills, manage your investments, file your tax return, or address any other necessary financial tasks while you are unable to handle your own affairs. You must have this document prepared even if all of your assets are held jointly with a spouse, child, or other family member. Although it's true that joint account holders can access funds to pay bills, joint holders of real estate can't mortgage or sell the property without the consent of all owners.
In addition to financial power of attorney, you should also prepare a revocable living trust to protect your assets. The trust should have provisions to determine your mental status, such as requiring the opinion of two different physicians, and specific instructions for what the successor trustee should do to take care of you if you become incapacitated.
For managing your medical care, you need to prepare a medical power of attorney document giving someone authority to make treatment decisions on your behalf. You will also need a HIPAA authorization granting this person access to your confidential medical records and a living will explaining your wishes regarding life prolonging medical treatments.
How Can We Help?
Our Pasadena estate planning firm can help ensure that your interests will remain protected no matter what the future holds. Please call our office at (626) 683-8113 or email us at info@PasadenaLawOffice.com to learn more about how to prepare your estate plan.