A common misconception is that estate planning equates to death planning. But planning for what happens after you die is only one piece of an estate plan. Just as important is making a plan for what happens if you become incapacitated during your lifetime.
What is Mental Incapacity?
Mental incapacity is caused by an injury or illness to someone where they are incapable of making informed decisions about their finances and well-being.
Avoiding Time-Consuming and Costly Guardianship or Conservatorship
Without a comprehensive incapacity plan in place, a judge can appoint someone (even a stranger or your most despised relative), known as a guardian or conservator, to take control of your assets and make all personal and medical decisions on your behalf under a court-supervised guardianship or conservatorship.
- In most cases, the guardian or conservator must report all financial transactions to the court (either on an annual basis or at least every few years). Additionally, investment regulations may force your guardian or conservator to sell assets at an inopportune time, with potentially bad tax and investment outcomes.
- The guardian or conservator is also typically required to obtain court permission before entering into certain types of financial transactions (such as mortgaging or selling real estate) or making life-sustaining or life-ending medical decisions.
If you become incapacitated, a guardianship or conservatorship can be an expensive, distracting, and emotionally draining process for your family. You and your loved ones may lose valuable time, money, and control until you either regain capacity or die.
Fortunately, court interference can be avoided with comprehensive estate planning. Please contact our office now to schedule a convenient time for us to discuss your questions about incapacity.