In previous articles, we discussed the consequences of dying without a will or without proper beneficiary designations in place. Few of us would want to see the state court system decide how our assets are distributed or how our children are cared for. But the need to have your clear and explicit wishes spelled out in advance is not only limited to death. It’s also needed in case of incapacity during your lifetime.
As discussed in our explanation of estate planning, durable power of attorney (POA) and advance directives such as durable power of attorney for healthcare and living will documents allow you to lay out how you would like decisions to be made on your behalf if you’re unable to make them for yourself. If you were to become incapacitated without these critical documents in place, things get complicated and may not unfold as you would like.
The Impact of Not Preparing for Incapacity
The initial impact would be felt financially. Nobody would immediately be prepared to handle your financial and legal affairs. Without a durable POA, nobody would be able to pay your bills, manage your investment accounts, or sign critical documents on your behalf.
Your loved ones would need to institute legal proceedings and request a probate court to appoint a guardian to carry out these responsibilities. This can be a long, frustrating, and expensive process which may result in somebody who you don’t fully trust making decisions for you.
The issues would be similar on the medical front. If you were to become incapacitated without a healthcare POA, there would be no legal document that spells out who is able to make medical-related decisions in accordance with your wishes.
In some states, a spouse, child, sibling, or parent may be able to step in to do so, but if you do not have a living will, that person would have no guidance as to what kind of medical care you would want in different scenarios. These can truly be life or death decisions.
It is critical to have these and other estate planning documents in place. It may be uncomfortable to contemplate the scenarios in which they would be used, but they are necessary to ensure that you have a say in the decisions that are made on your behalf. Work with a trusted attorney to be certain that you the right documents in place.
If you have questions about this article or other financial related concerns, please reach out to our team to setup a time to discuss.