Do you have a plan to manage incapacitation? It’s a risk that could be reality for many retirees. Incapacitation is the inability to make or communicate your own decisions. It’s often caused by cognitive disorders like Alzheimer’s, but people also become incapacitated because of strokes, cancer or other conditions.
Incapacitation may not seem like a high planning priority, but it’s too important to ignore. If you don’t have a plan, your family could face legal and financial challenges during your incapacitation. You may have people making decisions on your behalf whose wishes don’t necessarily align with your own.
Below are a few different costs and consequences that can come from incapacitation if you don’t have a plan in place. Incapacitation may not be a likely scenario, but it is possible, especially if you’re entering retirement. Now may be the time to develop a strategy.
One of the biggest challenges of incapacitations is that it limits your ability to manage your finances. The bills don’t stop just because you’re struggling with medical problems. If you’re married, your spouse will likely be able to handle bill payments, investment management and more. However, he or she could have trouble with accounts that are only in your name.
If you’re not married, there could be more complicated issues. A grown child or other family member may need to manage your bills and income. You may not want that person delving into your financial affairs. It’s also possible that the person may be someone who doesn’t have your best interests at heart.
You can minimize these risks in a number of ways. One is to utilize joint accounts whenever possible, especially if you’re married. At a minimum, keep your spouse informed about your various accounts, bills and income sources.
You also could put certain assets in a living trust. You’d name yourself as trustee and another person as successor trustee. If you ever become incapacitated, your successor trustee takes over management of the trust assets.
There could also be legal ramifications to your incapacitation. Even if you’re covered by health insurance, many insurers may not agree to coverage for certain procedures without consent from the primary party. Obviously, if you’re incapacitated, you can’t provide consent or guidance.
In that case, the insurer may wish for someone to become your guardian or power of attorney. That usually requires legal documents, court hearings and more. It can be especially complex if your family can’t agree on who should fill that role.
Again, you can eliminate this confusion with a little advanced planning. A power of attorney is a document that designates another individual as your decision-maker in the event you become incapacitated. That way you know who is making decisions on your behalf, and you can communicate your wishes to that person.
The personal impact of incapacitation is often the most significant cost for families. Your health issues could create an emotional and traumatic period for your family. They could be struggling with logistical challenges, health care costs, and stress about your wellbeing.
It’s possible that your family members may not agree on the best course of treatment or how your finances should be managed. Multiple people may feel that they should be in charge. Because the issue is already emotional, it’s not difficult for these conflicts to become heated.
Probably the last thing you want is for your loved ones to fight or argue because of your health issues. Incapacitation planning can minimize this risk and provide clear instructions to your loved ones. That way they can spend less time arguing about decisions and more time supporting you and one another.
Ready to develop your incapacitation plan? Let’s talk about it. Contact us today at Heritage Financial North. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.
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