Incapacity Planning in Leawood
The article below is short, but very informative. We incorporate a lot of incapacity planning in our estate plans in Leawood. Many times, it is the incapacity that is the real problem and not death. Once incapacity occurs, then there is a lot of the things that most of us do that not only we cannot do ourselves, but also others cannot do them without a time consuming and expensive court process. For example. you just cannot go and open a certificate of deposit in your mother’s name. If she is incapacitated, then what do you do? What does the bank do?
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Incorporating incapacity planning into an estate plan
There are numerous things to think about when you are considering the impact of incapacity, even when you have substantial financial resources available for your long-term care. Incapacity could be caused by a disease like dementia or Alzheimer’s, or a severe accident that leaves you in a coma, unable to make decisions for yourself. A prolonged health issue may last for an indefinite number of years; therefore, it is important to plan for the worst.
It is often more complicated to live in an incapacitated state than it is to die. Who can write checks on your behalf to pay your bills, or make decisions on the type of care that should be provided? Do you want a “do not resuscitate” order to prevent medical professionals from performing CPR if you go into cardiac arrest? Do you want water and food, water but no food, or no food or water, provided for you?
It can be easier for you and your surviving family if you have made these decisions in advance. An Advance Directive for Health Care allows you to manage your future medical care. Your family would then know your wishes and would not have to deal with the burden of wondering if they made the right call. You may also want to find the HIPAA waivers for your state, to alleviate any issues you may encounter regarding protected health information.
A Financial Power of Attorney allows you to nominate someone to attend to your financial affairs in the event you cannot. It allows you to choose who will act in your place and carry out your financial plan according to your goals and concerns. It is important to talk with the person you have nominated in advance, as they may be unwilling to accept the responsibility.
When planning for incapacity, long-term care insurance is often discussed. However, once you have an adverse diagnosis, often it is too late to purchase a traditional long-term care policy. The reality is, in Georgia, the median annual rate for a semi-private room at a nursing home with full-time care is about $72,000, growing at 4 percent annually. A 10-year stay could cost your estate around $584,000, while a 20-year stay could total about $985,000 in today’s dollars. However, if you have concerns about running out of money or are concerned about leaving assets for your heirs, you may consider hybrid life insurance products or single premium annuity contracts with an income rider, as these policies do not have as stringent underwriting processes. Both of these allow you to access a portion your money in the event you have a long-term care need.
If you are able to self-insure and still intend to bequest money on your deathbed to a charity, your children or grandchildren, you may consider managing the remaining portfolio as if it already belonged to your heirs. You then manage the assets with them in mind, using their investment time horizon, meaning potentially less fixed income and more long-term holdings in stocks or other growth investments.
You should create your financial plan first and work with an estate planning attorney to ensure the correct legal documents are in place. Then, if appropriate, work with a trusted insurance agent when considering insurance products to achieve a financial goal.
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