Estate Planning for the Possibility of Future IncapacityEstate Planning for the Possibility of Future Incapacity

In the last two blog entries we discussed the importance of planning for the possibility of future incapacity. While some people may think this is a topic that impacts only the elderly, incapacity can strike anyone at any time, due to an accident, injury, or illness. In this month’s blog entry we will discuss how the use of a living trust and a durable financial power of attorney provide protection and a plan in the event of incapacity.

Revocable Living Trusts
A living trust is a document which you create during your lifetime which allows you to specify who will manage the assets of the trust (the “successor trustee”) and who will receive the assets of the trust (the “beneficiaries”) after your death. During your lifetime, you are typically both the trustee and the beneficiary of the trust, ensuring that you still have complete use and control over your assets. As the name implies, you can revoke the trust or make changes to the provisions of the trust during your lifetime. In the event you become incapacitated, your successor trustee will manage the trust assets on your behalf, often avoiding the necessity for a conservatorship proceeding, which we discussed in our July blog entry.

Durable Powers of Attorney for Financial Matters
A durable power of attorney for financial matters is a document in which you specify who will make financial decisions on your behalf in the event you become incapacitated (your “agent”). This document may be immediately effective upon execution, or it may be springing, meaning it becomes effective only upon your incapacity. The document is “durable” in nature in that it is not affected by your subsequent incapacity-the powers given to your agent will continue despite your loss of capacity. Even if all of your assets are held in your living trust, and are therefore under the management of your successor trustee if you become incapacitated, you will need a durable power of attorney for financial matters to give your agent the authority to sign your tax returns, deal with your insurance company, and handle other financial matters on your behalf.

Estate Planning Issues Require Experienced Legal Representation
Comprehensive estate planning includes careful consideration of various contingencies, such as the possibility of future incapacity. If you need assistance with estate planning, contact the Casiano Law Firm for a complimentary telephone consultation with an experienced San Diego elder law and estate planning attorney.