5. Because you want to decide who will make financial and healthcare decisions for you if you become incapacitated.
Generally speaking, incapacity is the inability to manage your affairs and make sound decisions for yourself. Incapacity can occur because of the aging process, an illness or an injury. It may be temporary or it may be permanent. It is often unexpected. But the world doesn’t stop because you’ve become incapacitated. Decisions still have to be made concerning your financial affairs and your healthcare. You may also have business interests that need ongoing attention.
If you become incapacitated without having done proper planning, it’s likely a judge will be the one deciding who should make your financial and healthcare decisions. The judge may appoint the same family member(s) or friend(s) that you would have named for yourself. But the judge may appoint someone else. And even if the judge appoints the same person you would have chosen, your lack of planning forced your family or friends to go through a costly and unpleasant court proceeding to get the guardianship or conservatorship established.
The court proceeding could have been avoided through proper planning, which would likely include the preparation of a General Durable Power of Attorney and a Healthcare Power of Attorney and possibly a Living Trust. The powers of attorney allow the person or persons you name to make financial and healthcare decisions on your behalf. The powers you grant to the person can be broad or limited depending on your wishes. A Revocable Living Trust has many benefits but incapacity planning is one of its best features. When assets are held in the trust, the Trustee, which is often you initially, has complete management and control of the assets. If you become incapacitated, your Successor Trustee, who can be a trusted family member, friend or trust company, seamlessly steps into your shoes and manages the trust assets for your benefit and on your behalf.
