As estate planners, most of our clients come to us seeking guidance as they plan for the end of their lives, focusing on how they are going to take care of those people and things they care about the most when they are gone. This is certainly a necessary endeavor, but planning for our timely or untimely deaths is only a part of comprehensive estate planning.
While planning for death should be a critical part of the planning we do during our lives, there are fates often worse than death. Disability and incapacity caused by sickness, accident or just old age can put emotional, physical and financial strains on an estate that come about under no other circumstances. Extended in-patient and hospice care, expensive medications and life support, loss of income and benefits, loss of relationships – all of these are common results of diminished capacity or complete incapacity.
So what are the critical issues, components and concepts that come in to play when planning for incapacity as opposed to planning for death? Although the answer to this question is far broader in scope then what can be covered in this post, there are several important differences:
Fiduciary Designations: A critical part of planning for disability/incapacity is the appointment of individuals to make decisions regarding your financial, physical, and otherwise personal affairs. While fiduciaries are certainly an important part planning for your death, they serve a much more active part in incapacity planning, for instance making sure that bills are paid, accounts are transferred, and investments are monitored and maximized. To carry out these important functions, it is extremely important that you designate the right people to be your fiduciaries.
Health Care Directions: Most of us have, at one time or another, contemplated what we would want were we to find ourselves in a permanently unconscious and incapacitated state. Sometimes called living wills or, more accurately, health care directives, documents that specify our wishes for treatment and life-sustaining measures are extremely important components of any comprehensive estate planning. Unfortunately, they are often the planning documents that are overlooked.
Disability Insurance: Although not right for everyone, disability insurance can provide the financial wherewithal to weather the financial storm associated with long-term health care costs, maintenance and support. Life insurance is staple of any comprehensive estate plan, but it is obviously limited in its usefulness during your life. Depending on your age, health and other individual circumstances, disability insurance can provide assurance that your disability will not be a drain on your estate, as well as those that you love the most.
Estate planning is very fluid and often complex series of factors, considerations and balances. Death is, for everyone, a statistical certitude. That is probably why most people think of estate planning as planning only for what happens upon your death. But again, there are fates worse than death, fates that require just as much planning in order to mitigate should they come to pass. When you see your estate planning attorney, be sure to tell him or her that you are just as interested in planning for disability than you are for death. This is just another way of bringing to pass the peace of mind that comes only from preparing a comprehensive estate plan suited to your and your family’s particular needs.