Facing the possibility of incapacity can be daunting, but taking steps to prepare for it is a critical component of comprehensive estate planning. It’s not just about safeguarding your assets; it’s also about providing clear directions and support for your family during such a challenging time. Planning ahead allows you to articulate your wishes regarding asset management and medical treatment, helping ensure that your preferences are respected and followed, even if you’re unable to communicate them yourself.
If you’re unsure where to start or have questions about planning for potential incapacity, the team at New York Legacy Lawyers by Yana Feldman & Associates PLLC is here to assist you. Our New York estate planning lawyers can provide practical advice and support in this often-overwhelming process. Our approach is tailored to meet your unique needs and circumstances, avoiding the common pitfalls and providing you with peace of mind knowing that your estate planning is in capable hands. Contact us today at (718) 713-8080 to schedule a consultation.
What Is a Durable Power of Attorney?
A Durable Power of Attorney is a document that empowers another individual to carry on your financial affairs in the event you become disabled or incapacitated. Without a Durable Power of Attorney, it may be necessary for one of your loved ones, including your spouse or adult child to petition a court to be appointed guardian or conservator in order to make decisions for you when you are incapacitated. This guardianship process is time-consuming, expensive, often costing thousands of dollars and it can be emotionally draining for your family.
There are generally two types of durable powers of attorney: a present Durable Power of Attorney in which the power is immediately transferred to your attorney in fact; and a springing or future Durable Power of Attorney that only comes into effect upon your subsequent disability as determined by your doctor. When you appoint another individual to make financial decisions on your behalf, that individual is called an agent or attorney in fact. Most people choose their spouse or domestic partner, a trusted family member, or a friend.
Who Can Establish a Power of Attorney?
Generally, any individual over the age of majority and who is legally competent can establish a Power of Attorney.
Who May Act as an Agent Under a Power of Attorney?
In general, an agent, or attorney in fact, may be anyone who is legally competent and over the age of majority. Most individuals select a close family member such as a spouse, sibling, or adult child, but any person such as a friend or a professional with an outstanding reputation for honesty would be ideal. You may appoint multiple agents to serve either simultaneously or separately. Appointing more than one agent to serve simultaneously can be problematic because if any one of the agents is unavailable to sign, action may be delayed. Confusion and disagreement between simultaneous agents can also lead to inaction. Therefore, it is usually more prudent to appoint one individual as the primary agent and nominate additional individuals to serve as alternate agents if your first choice is unwilling or unable to serve.
What Is a Durable Power of Attorney for Health Care?
The law allows you to appoint someone to decide about medical treatment options if you lose the ability to decide for yourself. You can do this by using a “Durable Power of Attorney for Health Care” or Health Care Proxy where you designate the person or persons to make such decisions on your behalf. You can allow your healthcare agent to decide about all healthcare or only about certain treatments. You may also give your agent instructions that he or she has to follow. Your agent can then make sure that healthcare professionals follow your wishes and can decide how your wishes apply as your medical condition changes. Hospitals, doctors, and other healthcare providers must follow your agent’s decisions as if they were your own.
What Is a Living Will?
A Living Will informs others of your preferred medical treatment should you become permanently unconscious, terminally ill, or otherwise unable to make or communicate decisions regarding treatment. In conjunction with other estate planning tools, it can bring peace of mind and security while avoiding unnecessary expense and delay in the event of future incapacity.
What Is a HIPAA Authorization?
Some medical providers have refused to release information, even to spouses and adult children authorized by the Healthcare Power of Attorney on the grounds that the 1996 Health Insurance Portability and Accountability Act, or HIPAA, prohibits such releases. Therefore, as part of your incapacity planning, you should sign a HIPAA authorization form that allows the release of medical information to your agents, successor trustees, family, or any other individuals you wish to designate.
Living Revocable Trust With Incapacity Clause
A living revocable trust with an incapacity clause is a practical tool for asset management in the event the grantor cannot manage their affairs due to incapacity. Typically, the grantor acts as the initial trustee, controlling and managing their assets freely. However, should they become unable to do so due to mental or physical incapacity, this trust contains a critical provision. It designates a substitute trustee to step in and manage the trust’s assets, adhering to pre-set conditions by the grantor.
The primary advantages of incorporating an incapacity clause in a living trust are the smooth transition of asset management and the potential bypass of guardianship. These are particularly important for assets that require immediate and ongoing attention, such as investment real estate. Without this provision, these assets would be left in a precarious state, potentially leading to significant financial losses.
The incapacity clause should clearly define what constitutes incapacity, often determined by medical evidence such as a letter from the treating physician or confirmation from two independent doctors. This safeguard prevents premature or unwarranted transfer of control. Moreover, if the grantor’s condition improves and they regain the ability to manage their affairs, the trust is structured to allow for a seamless return to their role as trustee. This setup helps maintain asset management continuity without court interference, preserving the value and integrity of the estate.
For further assistance or to address any additional concerns, contact New York Legacy Lawyers by Yana Feldman & Associates PLLC today at (718) 713-8080. Our New York estate planning lawyers can support you in securing your future and helping ensure your wishes are respected.
Aspect | Details |
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Definition | A Durable Power of Attorney allows another individual to manage your financial affairs if you become disabled or incapacitated, avoiding the need for court-appointed guardianship, which can be time-consuming and costly. |
Types | Present Durable Power of Attorney: Immediate transfer of power to the attorney in fact. Springing or Future Durable Power of Attorney: Comes into effect upon subsequent disability as determined by a doctor. |
Who can establish a Power of Attorney? | Any individual over the age of majority and legally competent can establish a Power of Attorney. |
Who may act as an agent under a POA? | Any individual legally competent and over the age of majority. Common choices include spouses, siblings, adult children, trusted friends, or professionals with a reputation for honesty. Multiple agents can be appointed but may lead to delays or confusion. |
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