When people look into using trusts for estate planning, they primarily think about how the trust will be beneficial after they pass away. However, another key benefit of a trust is its ability to plan ahead for incapacity. A will does not go into effect until you die; a trust goes into effect as soon as it is created. This allows you to create a plan for your assets should you become incapacitated.
What does it mean to plan for incapacity in a trust?
Becoming incapacitated is a major fear for many people, which is perhaps why many do not consider it while estate planning. While the overall odds of becoming incapacitated are low, you do not want to put off this area of estate planning. When you become incapacitated, either due to aging, health problems, or an accident, every minute counts. If you have plans in place for how your assets will be managed, who will manage your financial affairs, and who is responsible for making healthcare decisions, you can feel confident that your wishes will be respected.
When you create a trust, you maintain control of it and the assets contained in it until you pass away or become incapacitated. Planning for incapacity in a trust involves thinking about what standards must be met for you to be considered incapacitated and who will manage assets until you recover.
Why is incapacity planning important?
Incapacity planning is important because incapacitation could truly happen to anyone at any time. No matter how young or healthy you are, you could get hit by a car crossing the street or suffer an unexpected health problem that leaves you unconscious for an extended period of time. If this happens, you can make it easier for your family to manage your assets and take care of matters in a way that reflects your preferences. Although we hope that you will never need to use your incapacity plan, you will enjoy greater peace of mind knowing that the plan is available if you need it.
What are the benefits of using a trust for incapacity?
Planning for incapacity in your trust offers a number of benefits:
- Saves time. If you are incapacitated, it can be very difficult for a trusted family member to gain access to your accounts and manage your assets. For example, if you have real estate, the company will still expect your mortgage, taxes, and insurance to be paid on time. Without a trust that includes specific provisions for incapacity, it could take weeks for your next of kin to gain access to these accounts, racking up fees and damaging your credit.
- Makes your wishes clear. When someone is unable to voice their preferences, the people around them often disagree about what that person would If you become incapacitated and there is no plan for your assets, everyone will have an opinion. Your sister with a dozen failed businesses might claim that you would want her to be able to take a loan out against your assets, while your estranged uncle might claim that you promised to lend him money for living expenses before you became incapacitated. Clear directions eliminate these issues.
- You maintain control for as long as possible. People often worry that planning for incapacity will require them to give up control of their assets. However, your estate plan will include clear standards that must be met before your incapacity plan goes into action. Until that occurs, you have complete control.
Which other documents should my estate plan include?
In addition to a trust, your incapacity plan should include other documents. We often recommend:
- An advance directive for health care
- Financial power of attorney
- Living will
- HIPAA authorization
We’ll Help You Meet Your Estate Planning Goals
The team at Gullotta Law Group is ready to help you with your estate planning needs, no matter which stage of life you’re in. To schedule your appointment, call us at 707-938-7234 or contact us online.