PLANNING FOR INCAPACITY
By: Sandra L. Clapp, Esq.
As we go through life, most of us don’t think about “incapacity” or losing our mental functioning. Capacity can be a difficult issue to define and determine. A loss of capacity can be gradual, such as what may occur with aging or illnesses like dementia or alzheimers. A loss of capacity could occur suddenly, even for a young person, through an accident or significant medical event. A decrease in capacity can prove to be one of the most difficult issues a family or individual will face. As capacity wanes, the individual may become vulnerable to manipulation, financial or physical abuse, or be a risk to herself or others. Alternatively, as health or capacity decreases the threat of having a person declared incompetent can be used as a manipulative tool to achieve a desired result. Because capacity affects a person while living, it is important to plan for this possibility and develop a protective mechanism to address this difficult situation.
Definition of Capacity. The definition of “capacity” will vary based upon the matter at issue. For example, a person may lack legal capacity to handle her own financial affairs, but have testamentary capacity to execute a will or testamentary document. The Idaho statutory definition of an “incapacitated person” for the court to appoint a guardian or conservator is a person who is “impaired . . . to the extent that he lacks sufficient understanding or capacity to make or communicate responsible decisions concerning his person.” Capacity is a legal conclusion, but is often based upon medical testimony or findings. Documents may be executed that set forth a definition of incapacity and develop a procedure to determine incapacity.
Planning Considerations. When planning for incapacity it is important to consider both asset management as well as health care. It may be appropriate for the planning to include consideration of disabled children or elderly parents who are dependent upon you for support or care. One of the most important decisions to make is the selection of the people you will trust to handle these matters on your behalf. You may identify different individuals to handle the health decisions as compared to financial affairs. Select individuals who are diligent, reasonable, trustworthy, have adequate time available, and can withstand stressful situations or demands. It is preferable to have alternate persons identified if the first choice cannot serve for any reason. If no individual in your life meets the criteria, professional institutions or individuals exist for these positions (such as banks, accountants, attorneys, or others with training). This is the most important decision you will make because the ultimate success of the plan is dependent upon the integrity and ability of the person(s) selected. Don’t feel compelled or obligated to name children as the agent if they are financially unsound, irresponsible, or irrational.
Documents. The most commonly used documents to contemplate loss of capacity are the general power of attorney for property and business affairs and a health care power of attorney. The authority granted in these documents does not require approval by a court to be invoked and there is generally no standard monitoring to make sure the power is used appropriately. Another common planning tool is a revocable trust which may contain detailed provisions regarding the process and findings to be utilized to determine that incapacity exists. Because the authority granted in a power of attorney for property may not be conditioned upon incapacity, it is important to make sure the content and use of the documents is understood before being signed.
Planning for incapacity can be a difficult issue to address, but may prove to be the most important decisions you make to insure your future is controlled and managed in your best interest when you are not able to make these decisions directly. This article is not intended to replace legal advice applicable to your situation and should be used only for informational purposes. Because of the complexity of the law, please consult with your attorney for proper guidance.