One of the most important components of the estate planning process is getting it done before it’s too late. When is it too late? Much of the time, the answer is not “when death occurs.” Instead, people are often ruled legally incapacitated by the courts long before they pass away. If the owner of an estate becomes legally incapacitated before making a plan or naming beneficiaries, then upon death the process kicks over to probate court — and that means a judge will make the decisions on your behalf, regardless of what you wanted.
Cadence Bank’s Trust and Management Executive Patrick Pacheco said, “People want to believe their family gets along pretty well and there won’t be any issues, but they are all just a collection of people. These folks have their own families and their own advisor, spouse or otherwise, whispering in their ears about what should happen or not happen. Will contests and incapacity or guardianship contests are the most bitter suits you ever get, and most of the time, control of the money is a driving factor.”
Sadly, those lawsuits are commonplace after a close family member passes away without going through the proper estate planning channels.
A person is legally incapacitated when they no longer have the physical or mental capabilities to properly communicate their wishes. This most often occurs when mental illnesses like dementia or Alzheimer’s disease ruin someone’s ability to think clearly. While that sounds simple, the ultimate determination often ends up in court when someone hasn’t named power of attorney.
Pacheco said, “If you are incapacitated, legally or otherwise, you won’t be able to sign contracts, estate documents, checks or anything of substance or do anything without help. The only thing you definitely want to avoid in almost all circumstances is a guardianship, because it is a court proceeding that requires budget approval, investment approval and spending approval. It can cost you, or more correctly the guardianship estate, a lot of money because court proceedings tend to ramp up all costs pretty quickly.”
That’s why you want to name a durable power of attorney while you’re still young. This person should be trustworthy, good with money, and reliable when carrying out your wishes. Most of what you want them to do should already be on paper when you name the person, so the responsibility will be mitigated somewhat. Still, don’t be upset with someone who doesn’t want to do it. It’s a big ask.
Your power of attorney will likely work in combination with a living will, which defines what can and cannot be done if incapacitation should occur.