A common misconception about Estate Planning is that its only purpose is to distribute your assets to your surviving family and friends when you die. While taking care of your loved ones after your death is one of the goals of an estate plan, a comprehensive plan should also take care of you. In fact, a well-drafted estate plan anticipates not just your death, but your incapacity as well.
For legal purposes, a person is considered "incapacitated" if s/he lacks the mental capacity to understand and manage his or her own affairs. Today, the likelihood of becoming incapacitated has increased dramatically. In fact, statistically speaking, at age 30, you are almost twice as likely to become injured or incapacitated as you are to die. This risk of incapacity grows with age – nearly doubling by the time you reach the age of 50.
Today in the United States, 40.3 million Americans are age 65 and older, an estimated 13% of the population, according to the U.S. Census Bureau. Indeed, the fastest growing segment of the population of the United States, according to government statistics, is people over the age of 65. It goes without saying that the risk of incapacity increases substantially with age. The U.S. Bureau of the Census estimates that as much as 47% of individuals over the age of 85 will develop Alzheimer’s disease, which generally results in incapacity. In light of these statistics, it is more important than ever to ensure that you – and your assets – will be appropriately managed in the event that you become incapacitated.
The State of Illinois recognizes two specific documents to plan for incapacity: (1) the Power of Attorney for Property, and (2) the Power of Attorney for Healthcare. In a Power of Attorney for Property (“POAP”), you name an agent to manage your financial matters, keeping your best interests in mind, while you are incapacitated. The agent under the POAP can handle virtually any financial matter you would be able to handle yourself if you were not incapacitated, including paying your bills, managing your accounts, and even dealing with government or other agencies concerning benefits you receive.
Similarly, a Power of Attorney for Healthcare (“POAH”) names an agent to make decisions concerning your health care while you are incapacitated, including decisions about life support and other life-sustaining measures. The agent under the POAH is also empowered to make anatomical gifts and provide for the disposition of your remains upon your death.
In the event that you become incapacitated without a POAP and POAH in place, it can be very difficult for your loved ones to manage your affairs – particularly in the case of your finances. In order to manage your affairs, your loved ones could be forced to seek guardianship over you. Obtaining guardianship requires court proceedings that can be complex, lengthy, and costly, and the court may even name a guardian that you yourself would not choose. To avoid this result, you can take simple steps today to protect yourself in the future by preparing valid Powers of Attorney for Healthcare and Property. As with all estate planning matters, you should consult with an attorney to ensure that your Powers of Attorney comply with Illinois law.
Have a legal question you would like to see answered in a future article? Email it to me at email@example.com
Disclaimer: This article provides legal information that is general in nature and is not intended as legal advice, nor does it create an attorney-client relationship with any person or group of persons. Should you wish to obtain legal advice concerning your particular situation, contact an attorney.