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Disability in Estate Planning: What You Need to Know

By Contributing Legal Editor Robin Gorenberg

The part of estate planning many people focus on is providing for what happens at your death.

But another important part of estate planning is to provide for what happens if you become disabled or incompetent.

Two of the most important documents that should be part of every estate plan are a (1) Health Care Proxy and a (2) Power of Attorney. Having these documents in place avoids the need, if you become incapacitated, of having someone go through a probate court process to become your legal guardian.

In the Health Care Proxy you name an agent to make your medical decisions if you are unable to make or communicate them.

In a Power of Attorney you name an agent (called “attorney-in-fact”) to make your financial decisions and have access to your financial assets (paying bills, dealing with real estate, etc.) during your lifetime.

The more common type of Power of Attorney is “immediate.” It can be used for incapacity or convenience – there is no need to have a doctor deem you are incapacitate in order for your agent to act. This avoids delays in being able to use the Power of Attorney, even if you are incapacitated. 

The other type of Power of Attorney is “springing” (it springs into effect only upon your incapacity), which means the agent cannot act under the Power of Attorney unless you are incapaciated, as definied in the document itself – involving a doctor evaluating you to determine if you are capable of handling your affairs and providing a letter stating that. While this type of Power of Attorney might be a bit more prudent, it causes delays in the use of it while waiting for the doctor’s evaluation and letter.

In addition to having the 2 “lifetime” documents above, you can set up a Trust. As mentioned above, most people think about a Trust primarily for “death planning” – i.e. providing for children to receive their inheritance at more mature ages, or avoiding the 1+ year probate process at your death by re-titling assets into the Trust. 

In the Trust you name a successor Trustee to serve at your death. However, a Trust can also serve to be a vehicle to make administering your assets easier during your lifetime if you become incapacitated. While a Power of Attorney would allow your named agent to access and deal with general/legal/financial matters, a Trust would have title to your assets, while you’re alive and healthy. You would have 100% control (and everything stays under your Social Security Number), but if you become incapacitated your successor Trustee would become Trustee in your place and manage the Trust for your benefit (you would still be the sole 100% beneficiary during your lifetime).

The Trust would have provisions for defining incapacity (involving a physician making that determination). In addition to your own incapacity, the Trust would provide for how the next trustee gets appointed if the 1st successor Trustee becomes incapacited him/herself. You can name several successor Trustees in a row, but if all of them are unable to become Trustee, a Trust has provisions for naming a new Trustee.

Remember – just having a Will does not help with disability or incapacity. The Will ONLY take effect upon your death.

Robin Gorenberg is an award-winning attorney who specializes in estate planning, probate and estate administration for individuals and law firms. Robin works with clients on both basic and complex estate plans, from Wills to all types of Trusts. Robin also helps clients after a loved one dies, navigating the legal process including probate, trust administration, and estate taxes. Robin’s goal is to communicate in a way that clients can easily understand, and to make them feel comfortable with the process and the ultimate documents. Robin is a graduate of Brandeis University and Boston College Law School, and has been practicing estate planning and probate for over 30 years. Robin is a member of the Boston Bar Association (Probate and Tax Sections). She lectures frequently on the topics of estate planning and probate. Learn how Robin can help you or someone you know at www.robingorenberg.com

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