What Actually Is Incapacity Planning?
Incapacity planning is, essentially, a plan that goes into effect when a person lacks the legal capacity to take care of themselves. This typically anticipates a mental incapacity, but obviously it can be broader and cover physical incapacity as well. For example, if the person is in a coma or otherwise unable to make decisions or to manage their own affairs, an incapacity plan may come into play.
When Should Someone Create An Incapacity Plan?
Most people only need a very basic plan to prepare for incapacity. However, these plans are particularly important for those who might be facing more immediate risk of incapacity, like people who’ve been recently diagnosed with a long-term illness or dementia that might cause a foreseeable risk. A diagnosis of that nature makes incapacity planning fairly urgent, but really everyone should have something together just in case.
What Does A Solid Incapacity Plan Take Into Account?
It takes into account a few factors. One factor to consider is who will be in charge of managing which assets on behalf of the person who is legally incapacitated. So for example, if they own property, we might want to have some document that allows another person to manage that property. The plan can also include bank accounts, investment accounts, and the management of any companies or businesses that the person planning for potential incapacity may be running, and have a game plan for those. Also, depending on if the person is working, we want to talk about getting some sort of insurance into place to make sure that their income is being replaced while they’re incapacitated as well.
What Details Should I Discuss With My Attorney When Doing Incapacity Planning?
I would make sure to talk about all the ways in which you bring in and use money and manage assets. So it’s going to be a more holistic analysis of what you have, how you use it, and how it’s managed. The goal is going to be essentially to replace you with someone who is just like you and continues your values, and will make sure everything is protected.
Can Someone Have More Than One Person With Power Of Attorney In An Incapacity Plan?
A typical power of attorney is going to be the kind of person you trust with your money. So for a married couple, it’s often pretty straightforward that a spouse would step into that role, while an older person might designate a child or children. Under Georgia law, you can have multiple people serving as your agent using a power of attorney. I typically don’t recommend it unless all those people are on the same page and there’s low risk of conflict. If for some reason a person doesn’t want a child, a parent, or a close friend to be a power of attorney, they might also look into bringing on a fiduciary, such as a professional in charge of their finances, or an attorney to manage finances for them if they’re incapacitated as well.
What Is The Difference Between A Power Of Attorney And A Guardianship?
Power of attorney is a document that’s made while the person is fully mentally capable, where they can designate someone to manage their affairs and assets financially. Assuming that a person didn’t sign a power of attorney or for some reason have progressed to a point where for the foreseeable future, they’re incapacitated, then a Georgia probate court can appoint a guardian and a conservator to manage the assets of a person. A guardian essentially manages the actual person and the conservatorship manages their money. A power of attorney document can nominate a person to be a conservator in case court supervision is needed. That’s another advantage of getting a power of attorney signed early – so they can designate that person rather than the court doing so.
The court will look at a number of factors to determine who the guardian and conservator should be. However, it’s a lot more intensive and it does require court reporting and a lot stricter supervision.
What Could Be The Role Of A Trust In Incapacity Planning?
A trust is one of the more powerful tools in incapacity planning. So even with a more basic revocable living trust, a person can transfer the bulk of their assets into it while they’re mentally capable. Then, upon the setting of incapacity as determined by a number of physicians, the trust language would allow a successor trustee to step in and to manage the assets held in trust. That allows you to avoid a lot of issues related to the power of attorney, such as banks not accepting it or anything along those lines, and allows the trustee to seamlessly manage the property for the benefit of the person who created the trust.
If the condition of that person improves, they will get back the power to be trustee and if that person either declines or passes from this life, then the assets are already in the trust and will then be distributed according to the terms of the trust.
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