Your estate plan should include an incapacity planning component. A significant percentage of people become incapacitated late in their lives. If you cannot make your own decisions, who would be empowered to handle your affairs? This is the question that you answer when you create an incapacity plan.
With this in mind, let’s look at powers of attorney and guardianship.
If interested parties were to come to the conclusion that you were unable to handle your own affairs, the state could be petitioned to appoint a guardian to act on your behalf. This mechanism is positive on the one hand, because a decision-maker who is of sound mind may be able to keep you safe, effectively manage your finances, and optimize your quality of life.
On the other hand, there are some drawbacks. The court may appoint a guardian that you would not have chosen on your own when you were of sound mind. In addition to this, it can take time to appoint a guardian, and this can present a problem.
Durable Powers Of Attorney
Durable powers of attorney are used to account for incapacity, because they remain in effect even if the grantor or principal becomes incapacitated. The difference between a durable power of attorney and a guardianship is the matter of choice.
When you execute a durable power of attorney, you choose a representative to act on your behalf should you become incapacitated. If you do nothing and a guardianship hearing is convened, the choice of a guardian is left in the hands of the state.
When you are younger you may have a hard time wrapping your head around the possibility of becoming incapacitated. Durable powers of attorney may seem unnecessary, because you may be under the assumption that it is unlikely that you will ever become unable to handle your affairs on your own.
When you digest some of the statistics you may see things from a different perspective. There are many different causes of incapacity. Some people become unable to communicate due to physical conditions, and there is also mental incapacity.
You have certainly heard of Alzheimer’s disease, but you may not be aware of how ubiquitous it is. Around four out of every 10 individuals who have reached the age of 85 have contracted Alzheimer’s disease. The segment of the population that is between 85 and 94 is growing faster than any other ten-year grouping according to the most recent census.
Alzheimer’s disease causes dementia, and dementia can strip you of your decision-making capabilities.
Hopefully, you will be able to act for yourself throughout your life, but the statistics are eye-opening. The prudent course of action would be to protect yourself through the execution of durable powers of attorney.