Incapacity Planning 101: Protecting Your Future and Your Family

Estate planning is often associated with creating wills and trusts, but there is more to it than just these documents. To ensure your loved ones can make critical decisions and manage your affairs if you become incapacitated, it is essential to include other legal documents in your plan. Power of attorney forms, healthcare directives, guardianship designations, and HIPAA authorizations play a vital role in incapacity planning. Properly executing these documents helps prevent the need for guardianship or conservatorship proceedings through the probate court.

Understanding Incapacity

Under Alabama law, an "incapacitated" person is someone who, due to mental illness, disability, physical illness, age-related infirmities, chronic intoxication, or other factors (except minority), lacks the ability to make responsible decisions.

It is important to note that not every disability results in incapacity. For instance, someone may be physically disabled but still able to make decisions about their finances or medical care. Conversely, a person may be incapacitated without being physically disabled, such as when someone loses their mental ability to make medical or financial decisions but is otherwise physically healthy. Incapacity can be temporary or permanent and may be caused by conditions like traumatic brain injuries, dementia, or strokes.

What is Incapacity Planning?

Incapacity planning is the proactive process of putting legal, medical, and financial arrangements in place to ensure that someone you trust can make decisions on your behalf if you are ever unable to do so. It is an essential part of long-term planning, especially for those concerned about aging, accidents, illness, or cognitive decline that may affect their decision-making abilities.

Durable Power of Attorney

A durable power of attorney is a legal document that allows you to designate an "agent" or "attorney-in-fact" to make financial decisions on your behalf if you become incapacitated. Unlike a regular power of attorney, which becomes void if you are incapacitated, a durable power of attorney remains valid in such situations.

You can grant your agent broad powers, such as managing bank accounts, paying bills, handling real estate transactions, or filing taxes. You may choose for this power to take effect immediately or only if you become incapacitated. You can revoke or amend the durable power of attorney at any time, as long as you are still mentally capable.

Advance Directive for Healthcare

An advance directive for healthcare (also known as a living will or healthcare directive) is a legal document that outlines your medical preferences in case you can no longer communicate your wishes due to illness, injury, or incapacity. This document provides guidance to doctors, healthcare providers, and family members on how to handle your medical care.

The living will part of the directive specifies your wishes for life-sustaining treatments and medical procedures if you are in a terminal condition or permanently unconscious. You can make decisions about whether you want to be kept on life support, resuscitated, or receive artificial nutrition or hydration if you are unable to eat or drink on your own.

The healthcare power of attorney section allows you to appoint someone you trust to make medical decisions for you when you are incapacitated. This person, often called your healthcare proxy, can make decisions on your behalf regarding treatments, surgeries, and other medical interventions. You can change or revoke this directive as long as you are mentally capable.

HIPAA Authorization

A HIPAA authorization is a legal document that gives permission for someone (like a healthcare provider, family member, or another designated individual) to access your health information. By completing a HIPAA authorization and providing it to your medical providers, you ensure that your healthcare proxy can access your health records when needed, even if you are unable to communicate.

You can revoke or amend your HIPAA authorization at any time, provided you are mentally capable.

Guardianship Designations

For parents, one of the most important aspects of estate planning is naming a guardian for their minor children or dependents in case of death or incapacity. This designation ensures that someone you trust will take care of your children’s physical, emotional, and financial needs.

If you have named a guardian for your children in your will, the court will generally approve your selection, as long as it is deemed appropriate. However, if you do not name a guardian and both parents are unable to care for the children, the court will appoint someone. This could be someone other than a family member, and the process may lead to disagreements among relatives. Minors above a certain age (typically 14) may also nominate a guardian, but the court will ultimately decide who will be responsible for their care. Like other incapacity planning documents, you may change your guardian designation at any time, provided you are mentally capable.

Revocable Living Trusts

A revocable living trust is a type of trust that you can modify or revoke at any time, as long as you are mentally capable. The trustmaker (you) often serves as the trustee, retaining control over the trust’s assets during their lifetime. Upon the trustmaker’s death, the assets are distributed according to the trust’s terms.

One significant benefit of a revocable living trust is that it allows for seamless asset management if you become incapacitated. Since assets are already placed in the trust, there is no need for a court-appointed conservator to step in. If you become incapacitated, the successor trustee takes over and can manage your finances, pay bills, and meet your financial obligations without interruption.

You can modify or revoke the trust at any time as long as you are mentally capable, giving you control over your estate planning as your circumstances change.

Peace of Mind

By planning ahead, you can give your loved ones the gift of avoiding stressful guardianship and conservatorship proceedings, ensuring that your care and affairs will be handled exactly as you wish. Guardianship and conservatorship proceedings can be expensive and time-consuming. Legal fees, court costs, and ongoing administrative expenses (such as annual reports) can accumulate quickly. The process itself can be complex, requiring extensive documentation and court hearings. Furthermore, these proceedings can be emotionally challenging for the person involved and can cause conflicts among family members.

At Provident Law / Estate Planning LLC, our goal is to give you peace of mind by ensuring that your wishes will be respected, and your affairs will be managed by someone you trust, regardless of what the future holds. Proper incapacity planning ensures that your loved ones can care for you and manage your affairs without the need for guardianship and conservatorship proceedings.

Your Next Step

As you move forward with your estate planning, we invite you to contact our team at Provident Law / Estate Planning LLC. We are here to guide you through the process, ensuring your plan is tailored to your unique needs and goals. Whether you are creating a will, establishing a trust, planning for incapacity, or reviewing existing documents, we are here to provide the personalized guidance you need. Reach out today to schedule a consultation and take the next step to give your family peace of mind.

About the Author

Colin McMichen is an experienced attorney and the founder of Provident Law / Estate Planning LLC, a Birmingham, Alabama-based firm. With a focus on estate planning and probate law, Colin is dedicated to helping individuals and families navigate complex legal matters with confidence.