Intro guide to incapacity planning
With Americans living longer and the potential need for long-term care, it’s important to prepare for the possibility of leaving financial and medical decisions to someone you can trust. One can become incapacitated at any time, so the sooner one sets the process in motion the better.
By Stephanie Kormanec
Making difficult choices now, and making your wishes known, can help protect finances and ease your concerns and those of your family.
It’s natural to assume that estate planning begins and ends with issues such as naming beneficiaries and transferring wealth after you’re gone. Yet one of the most important considerations is what happens during your life if an illness or accident leaves you or your spouse incapacitated. As longevity increases, nearly 70% of Americans who reach age 65 will eventually need long-term care, and 20% will require such care for more than five years†.
Prepare before the unexpected
Incapacity planning is about taking control, and it involves everything from long-term and end-of-life medical care to strategies that help ensure that your family has the financial resources to carry on through the major expenses those events can entail.
If you don’t take control, somebody else, including the courts, could wind up making choices for you.
For your family, failure to plan could mean fighting red tape to have a say in your care, or financial disruptions and uncertainty at an emotionally devastating time.
The need for such planning isn't restricted to older people. I recall the tragic story of a man who developed a terminal illness at the age of 40. In this case, the man had time to plan, making sure his wife could direct his medical care when the time came, had full access to his financial assets, and understood his end-of-life wishes.
As he became less and less capable, she had the tools necessary to make crucial decisions on his behalf and for the family such as advance medical directives.
Advanced directives are legal documents that can outline medical decisions you’ve made if you cannot at any time make the decisions yourself. For instance, a medical power of attorney form allows a person to assign the right to make medical decisions on their behalf, if incapacitated.
But catastrophic events don’t always afford that time. I‘ve seen cases where a sudden accident leaves families not just grieving but in a state of upheaval over who is prepared and authorized to make such decisions. That’s why planning ideally starts when everyone’s healthy. When planning, you should consider three vital and interrelated areas: personal preferences, health wishes, and financial needs.
"If you don’t take control, somebody else, including the courts, could wind up making choices for you. Planning ideally starts when everyone’s healthy."
Wealth Strategist, Huntington Private Bank®
Medical decisions when you’re incapacitated
The process starts with some basic questions. If a situation leaves you alive but unable to communicate, what health care do you wish to receive, or refuse to receive? Wishes should be spelled out in an advance medical directive. But don’t stop there. Detailed conversations with a spouse may not be easy, but the more information you share, the better you’ll be able to look out for one another’s wishes if one of you becomes incapacitated.
Don’t assume family members will automatically have a say in your treatment, or that doctors will even allow them to review your medical records. An advance medical directive grants someone of your choosing the authority to make medical choices on your behalf. This may be a spouse, grown child, or close friend. If you authorize more than one person, be sure they’ll be able to work together. You should also consider signing a Health Insurance Privacy and Portability Act (HIPPA) release, granting them access to your medical records.
Financial decisions when you’re incapacitated
With a better understanding of your personal and health-related wishes and needs, now’s the time for careful financial planning to make sure you can cover your own care and meet the financial goals you have for your spouse or family members.
You’ll need to review any government benefits or health care and disability you may have from an employer.
Next, think about financial tools that could be used to meet additional expenses. Would this be a good time to contribute to a health savings account, or to explore options for long-term care?
Another key consideration is who will have legal authority to make financial decisions if you’re no longer able to. Financial obligations such as taxes or mortgage payments don’t go on hold.
If you’re a business owner, you might ask bigger questions: Who can sign lending documents, execute tax returns, or consent to a sale of the business?
While the planning process may seem daunting, the hardest part is often the decision to set things in motion. To learn more, please contact your Huntington Private Bank® team to see how we can help, or find a Huntington Private Bank Office near you.
U.S. Department of Health and Human Services. Feb. 18, 2020. “How Much Care Will You Need?
” Accessed Oct. 25, 2022.
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