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    4. Incapacity: A good reason to fund your trust and name a power of attorney and health care proxy

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    Article

    Incapacity: A good reason to fund your trust and name a power of attorney and health care proxy

    July 29, 2019

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    By Sarah Richards

    With proper planning, you can avoid additional financial costs and stress on your loved ones if you become incapacitated.
    Some of the most problematic work we do is for families who are caring for an incompetent person. Many would benefit from being moved to an institutional setting, but cannot assent to be moved and do not have a health care proxy or durable power of attorney in place.

    In some cases, the situation is also complicated because of the way the person’s assets are held. For example, complexities can arise if the individual owns real estate but is not competent to sign a deed to sell it, or if the individual has a solely owned financial account that holds the funds needed to pay for care but is not competent to write checks.

    What incapacity planning can one do?

    In so many cases, situations like the ones mentioned above can be avoided. If the incapacitated person had transferred assets into a trust with proper trustee provisions, named an agent in a durable power of attorney, and named a health care proxy, the medical, financial, and legal aspects of care would be far less burdensome.

    What happens when there is not incapacity planning?

    If a person has become incompetent due to dementia, other incapacity, or an accident, the person’s care needs can be staggering. If the person’s financial assets cannot be easily reached by a trustee or agent under a durable power of attorney to pay for the care, and if the person has not named a health care proxy to make medical and living decisions, the only recourse may be a guardianship or conservatorship action in the Probate Court.

    Court proceedings are slow and expensive. Additionally, state law may require that the court appoint a lawyer for the incapacitated person or an independent lawyer to serve in the role of an advisor to the court. These professionals are generally paid with assets of the incapacitated person, causing another drain on family finances.

    The lawyer for the incapacitated person may not see eye-to-eye with the family about the kind of care that should be provided to the person or who should pay the care bills, causing additional emotional stress. In addition to the sadness and stress of caring for an incapacitated family member, the family may suffer additional emotional and financial stress arising from the court proceedings.
    The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.

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