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The Heritage Law Center, LLC Blog

Why You Need an Incapacity Plan

POSTED ON: March 27, 2024

So, what happens if someone doesn’t have an incapacity plan in place but becomes unable to make decisions for themself? You’ve probably heard that comedian Jay Leno is seeking conservatorship over his 77-year-old wife Mavis who has dementia. The filing says that Mavis “has been progressively losing capacity and orientation to space and time for several years.”

He’s asking a court to be put in charge of her personal and financial decisions. He’s also asking to create an estate plan for her, which would include a living trust so Mavis would be financially protected if Jay passed away before her. The hearing is set for April 9.

What Is a Conservatorship?

Conservatorship occurs when a court legally appoints a person to manage the personal or financial affairs and decisions on behalf of someone who is mentally or physically unable to care for themselves. If you want to be appointed someone’s conservator, you must prove the person can’t handle their own affairs and that you can serve in that person’s best interest.

An appointed conservator can manage the money, property, and business affairs of the protected person. Duties and responsibilities include doing things for the protected person like collecting and managing their assets paying bills and taxes, paying for living and medical expenses, and managing the maintenance of any real property.

Issues with Conservatorships

  • A conservatorship proceeding is a very public. It basically shares a person’s private finances with the public.
  • It’s a very expensive since it involves filing fees, attorney’s fees, publishing fees, etc.
  • The court process can take quite a while.
  • In Massachusetts, conservators must regularly provide a thorough accounting of the protected person’s assets, debts, and liabilities, plus file their annual taxes. This process ensures that the conservator isn’t taking advantage of the protected person.
  • Family members may not agree on who the best conservator would be, resulting in litigation.

Planning Ahead Is the Better Path

It’s better to put an incapacity plan in place ahead of time in case you or a loved one ever becomes incapacitated. A solid incapacity plan would include the following documents:

Durable Power of Attorney. A power of attorney is a legal document in which you choose a person (agent) to act on your behalf. The agent has a fiduciary duty to act in your best interest, managing your financial life, paying bills, and handling the transactions the document outlines. With a durable power of attorney, the authority is effective upon signing the document and it remains in effect even after an incapacity. It remains in effect until the principal (person who gave the power) passes away or if the principal regains their mentally competency and revokes the DPOA.

Revocable Trust. This is a legal document in which you let a trustee manage designated assets for you and your beneficiaries during your lifetime. While you’re healthy, you can completely control the assets in the trust by being the trustee. If you become incapacitated, the person you name as successor trustee can take over managing the trust for you.

If you have a revocable trust, you should also have a power of attorney since the successor trustee can only manage the assets in the trust. The power of attorney lets the named agent act for the assets outside the trust. Also, the power of attorney has some powers that the trustee doesn’t have like the ability to sign an individual tax return and deal with social security issues.

Health care proxy. A health care proxy lets you choose another person, known as an agent or proxy, to legally make health care decisions for you if you can’t do so yourself. It doesn’t grant any powers to the health care agent until you’re actually unable to make or communicate health care decisions. A HIPAA authorization is also included in this document. It allows your health care team to share information about things like your X-rays, laboratory and pathology reports, diagnoses, and other medical information with the person/entity you name on the form. This enables your loved ones to interact with your medical team and get information about your health situation.

A living will. Expresses your wishes as to how your medical providers should proceed in certain specific circumstances such as how and when you wish to receive medical treatment in the event of a terminal illness. For example, you can choose if you want or do not want feeding tubes, CPR, or antibiotics.

The living will works in conjunction with a health care proxy. If the living will doesn’t address a treatment or procedure that a doctor is considering, the proxy could make the decision based on what he believes the patient would want.

By putting a solid incapacity plan in place, if you or your loved one does become incapacitated, your family can avoid the time and money that would have been spent going to court to handle their affairs. If Leno and his wife had put these documents in place, he wouldn’t need to petition the court for a conservatorship.

We can help you put an incapacity plan in place for you and your loved ones just in case it’s needed in the future. Contact us today for a consultation.