• Worley Elder Law

Not Just Death and Taxes: 5 Essential Legal Documents You Need for Incapacity Planning


Comprehensive estate planning is more than just what happens to your stuff when you die, avoiding probate, or saving on estate taxes. A good estate plan doesn’t overlook the importance of having documents in place to manage your affairs if you become incapacitated and can no longer make decisions for yourself- financial or medical.


What’s the worst that can happen if I fail to make an incapacity plan?


We’re so glad you asked! By failing to actively plan what should happen if you become incapacitated, your loved ones will be forced to go to court and get a judge to appoint a Guardian who will take control of your assets and health care decisions. This Guardian will make all personal and medical decisions on your behalf. And the best part is- the court is involved in every aspect of your business while you’re incapacitated. So until you regain capacity or die, you (through your estate) will be footing the bill for legal and other fees and your loved ones will be forced to maintain immaculate records to justify every decision made by them on your behalf. And those costs can add up. The initial filing of a Guardianship case can easily hit $5,000.00 and get into the tens of thousands if it’s contested (in other words, people are fighting over who gets to control you). Sounds awesome right?


So, what do you need to do to avoid Guardianship?


Well, there are two areas of decision making that need to be considered: (1) financial and legal decisions and (2) healthcare decisions.


Finances and lawsuits during incapacity

If you are incapacitated, you are legally unable to make financial, investment, or tax decisions for yourself. Additionally, let’s say you’re incapacitated due to an accident. How do you hire an attorney to help get your medical bills paid?


Bills still have to be paid, tax returns still need to be filed, and investments still need to be managed. All of these things could be handled by a Guardian, but if they are court appointed, they get to charge you for paying your bills.


Healthcare during incapacity

If you can’t communicate or understand what’s going on, you won’t be able to make healthcare decisions for yourself. Because of HIPAA and other privacy laws, your loved ones may face delays or even be denied access to medical information during a crisis, when time matters the most. An even worse possibility is family members end up in court fighting over what medical treatment you should, or shouldn’t, receive (like Terri Schiavo’s husband and parents did, for 15 years).


We know you’re a reasonable person. You certainly don’t want those you love having to justify every action they make to some judge you’ve probably never met. And you certainly don’t want your assets being drained in the process. Be a hero for your loved ones and get prepared now so they never have to visit Guardianship court.


There are four essential legal documents and one we highly recommend you have in place before becoming incapacitated to save your loved ones additional heartache and to make sure your family is empowered to make decisions for you:


1. Durable Power of Attorney: This legal document gives your agent the authority to pay bills, make financial decisions, manage investments, file tax returns, mortgage and sell real estate, apply for state/government benefits if needed, and address other financial and legal matters outlined in the document.


In Florida, we have Durable Powers of Attorney. A Durable Power of Attorney takes effect as soon as it is signed. You do not have to be declared incapaciated before your agent can act on your behalf. This helps cut down on time spent waiting for a judge to declare you incapacitated (still better than Guardianship!) and can be helpful in a variety of situations. Being that it’s an immediate grant of power, you’ll want to make sure you trust the people named. Oh, and Florida requires you to initial these things we call “super-powers.” Give us a call today to learn more about what those are and what they do.


2. Designation of Health Care Surrogate: This is also commonly known as a “Health Care Power of Attorney” as it gives the person you name the power to make decisions related to your medical treatments. This document and the next are more important than many may realize. Research has shown that having these documents in place may improve the quality of care and satisfaction with the care, reduce health care spending (especially near the end of life), and results in more customized care based on your wishes. For example, medical marijuana is legal in Florida, and whether or not you would want treatment using medical marijuana can be included in your documents.


3. Living will: This legal document shares your wishes regarding end of life care if you are in an end-stage condition and can’t express your wishes. Do you want to be on a ventilator and have the family never give up hope, no matter what? Or do you prefer to be made comfortable and allowed to pass without potentially invasive treatments? There are no right or wrong answers. That’s why it’s so important for you to consider them now.


4. HIPAA authorization: This legal document gives your doctor authority to disclose medical information to an agent selected by you. This is important because health privacy laws may make it very difficult for your agents or family to learn about your condition without this release. A HIPAA release only grants access to information. It does not grant authority to make decisions on your behalf.


5. Revocable Living Trust: Unlike the documents discussed above, this document can assist with decisions while you’re living and after you’ve passed away. In the typical situation, you will be the Grantor, the Trustee, and the beneficiary of your own living trust during your life. But if you ever become incapacitated, your designated Successor Trustee will step in to manage the Trust assets for your benefit. Since the Trust is created based on your wishes and goals (for example, continuing to help your kids with tuition or medical expenses), the direction set out in your Trust provides guidance on how the property gets utilized by your Successor Trustees.


But wait, just because you set these documents up in the 90’s doesn’t mean you’re all set!


You cannot simply stick these documents in a drawer and forget about them. These are living documents and just like life can change, these documents should too. You must review your documents every couple of years or even earlier in the event of one of the 4 D’s- Death, Disease, Divorce, or Disaster. Update as needed. Our thoughts about life, death, and everything in between change as we get older or experience different events. Your documents should reflect your current thoughts and goals in life.


If you keep your incapacity plan up to date, talk to those you’ve named, and make the documents available to your loved ones and trusted helpers, it will make everyone’s life just a bit easier, keep strangers from getting involved in your business, and give you peace of mind knowing you’ve protected your family.



Are you ready to set up your documents? Or do you have questions about what you’ve read and heard? Or, did you set your documents up 20 or so years ago and think it may be time to update? Whatever your needs are, Worley Elder Law is here to assist you with understanding the best direction for your situation. Call or email us today to set up your free consultation.

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