Incapacity Planning is Party of a Comprehensive Estate Plan

Comprehensive estate planning is more than planning for gifts after death and avoiding probate. Estate planning must also create a means for managing your affairs if you become ill and mentally incapacitated. As a result, an essential part of any comprehensive estate plan are the documents that provide your trusted individuals with the authority to manage your health decisions and finances if you become ill. Two essential estate planning documents are an Advanced Health Care Directive and a Durable Power of Attorney.
Advanced Health Care Directive
An Advanced Health Care Directive allows you to select the individuals that will make health care decisions for you in the event you cannot make them for yourself. The Directive also allows you to make decisions regarding end of life, pain management, quality of life, donation of organs at death, and the disposition of your remains.
Without a Directive, your family may not be able to make health care decisions for you and may be denied access to medical information during a crisis situation. They may even end up in court fighting over what medical treatment you should, or should not, receive.
Durable Power of Attorney
A Durable Power of Attorney allows you to select the individuals that will manage your finances during a period of incapacity. Even if you have a Revocable Trust, you still need a Durable Power of Attorney because some assets cannot be held in a trust, and your agent may need additional financial authority.
Without a Durable Power of Attorney your family may not be able to pay bills, make financial decisions, manage investments, file tax returns, mortgage and sell real estate, and address other financial matters that are described in the document.
What Happens Without Incapacity Planning?
Without a comprehensive estate plan in place, a judge may need to appoint a conservator to take control of your finances and health care decisions. The conservator will make all personal and medical decisions on your behalf as part of a court-supervised conservatorship proceeding. Until you regain capacity or die, you and your loved ones will be faced with an expensive and time-consuming conservatorship.
At the very least, everyone should have a Durable Power of Attorney and an Advanced Health Care Directive. They are statutory forms in California, and they are fairly easy for an attorney to draft. In addition, I have reviewed many “estate plans” that do not have these two core documents. A Revocable Trust and a Will are not enough to take care of you during an illness and help prevent the need for a conservatorship. For your sake, and your loved ones, make sure that you are protected today.

Three Common Estate Planning Myths

Estate planning has its share of myths and misconceptions.  Understanding some estate planning myths may help you create and maintain a plan that will work the way it was intended.  Three common estate planning myths we encounter at Santa Barbara Estate Planner are discussed below.

Estate Planning Myth #1 – I Don’t Need an Estate Plan Because my Spouse Will Inherit Everything.

A common belief is "if you are married and don’t have a will or a trust, your spouse will still inherit everything."  Unfortunately, this is not always the case.  The person who will inherit your estate, even if you are married, depends on many different factors, including how your property is titled, who you have named on your pay on death beneficiary designations, and the laws of the state where you live and any other state where you own property.  The only way to insure your spouse will inherit everything is to sit down with an experienced estate planning attorney who will help you create an estate plan that will meet all of your goals.

Estate Planning Myth #2 – I Don’t Need an Estate Plan Because my Family Knows my Final Wishes.

You have shared your final wishes with your family, and you are confident that they will “do the right thing” after you die.  Even if you are confident that your family will "do the right thing" after you die, they may not be able to accomplish your wishes without a valid will or trust.  First, the title on the property will determine who inherits it (not the person you instructed your family to gift the property to).  In addition, if you fail to complete or update pay on death beneficiary designations for assets such as bank accounts and life insurance policies, your family does not have any authority to tell the bank or insurance company who should inherit the proceeds.  Finally, without an estate plan, the laws of the state where you live and any other state where you own property will dictate who inherits your probate estate, not your family.  The only way to insure that your property will go to your intended heirs is to sit down with an experienced estate planning attorney who will help you create an estate plan that will meet all of your goals.

Estate Planning Myth #3 – I Made an Estate Plan, I'm Done.

An estate plan, drafted by an experienced estate planning attorney that meets all of your goals, will still require regular maintenance.  As the years pass, laws change, people and relationships change, and your needs, goals, and concerns may change.  The only way to insure that your plan will work the way you intend it to work is to pull it out of the drawer every few years and have it looked over by your estate planning attorney.

Final Thoughts About Estate Planning Myths

These are only three common estate planning myths.  Unfortunately, there are many more.  The only way to separate myth from reality, and get a plan that will work for you and your family, is to retain the services of an experienced estate planning attorney.  Call us today at (805) 669-7009 or email us at tim@santabarbaraestateplanner.com.

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