Planning for Your Incapacity: The Forgotten Part of Your Estate Plan

Everyone who makes an estate plan has a “why.” To provide for their family. To create a legacy. To make sure their children have a guardian if something happens to them. But an estate plan isn’t just about what happens after you die. It’s also about what could happen while you’re still alive—specifically, incapacity. The need for incapacity planning should be part of everyone’s “why.”

What is Incapacity?

When we speak of incapacity, we are talking about the inability to manage one’s personal care, property, finances, or legal matters. Some types of incapacity are temporary. For instance, a child lacks legal capacity to make important decisions, but that incapacity goes away when they reach the age of majority. A person who has suffered a serious accident may have temporary physical incapacity, but will eventually heal and be able to care for themselves again.

However, many types of incapacity are permanent. Dementia is a common cause of permanent incapacity, in which a person needs someone else to make personal, medical, and financial decisions for them on an indefinite basis. This type of incapacity is common in older people, but anyone can become suddenly and permanently incapacitated by an illness or accident. That’s why it’s critical for even young adults to understand planning for your incapacity.

How to Plan for Incapacity

There are multiple documents that should be a part of your estate plan in the event you become unable to make or express important decisions for yourself. They include:

Durable Financial Power of Attorney

A financial power of attorney is a document that allows you (the principal) to appoint someone you trust (your agent) to handle your financial business on your behalf. You can make this power as narrow as the ability to conduct one transaction, or as broad as the authority to manage all of your financial decisions and transactions.

When you are planning for incapacity, you want a financial power of attorney that is broad, so that your agent can take any action that you would be able to take on your own behalf, like pay your bills or do your banking. You also need the power to be “durable,” which means that the grant of authority survives your incapacity. After all, that is why you are establishing the power of attorney. You can also make the power “springing,” which means that it will not take effect unless and until you become incapacitated. Since your agent under a durable financial power of attorney will have the ability to control your finances, you should appoint someone that you trust to act in your best interests. Should you create a durable financial power of attorney and later change your mind, you can revoke the power or change your agent.

Patient Advocate Designation (PAD) or Medical Power of Attorney

If you should become incapacitated, it’s likely that you will have a medical condition that requires someone to make decisions about treatment and consent to treatment on your behalf. If you are not in a position to make and communicate your own wishes about your medical care, you need to give someone else the legal authority to do so.

In Michigan, that is done through a document called a patient advocate designation, otherwise known as a medical power of attorney, durable power of attorney for healthcare, or healthcare proxy. Your designated patient advocate can make most medical decisions on your behalf, and you can also give them the authority to consent to mental health treatment for you as well as make decisions about end-of-life care and organ donation for you.

Naturally, you should choose a patient advocate that you trust with what could be life-and-death decisions, and you should discuss your wishes with them so they can confidently carry your wishes out if the need arises. As with a financial power of attorney, you can revoke a patient advocate designation or change your agent at any time before you become incapacitated.

Living Will

A living will is a document that tells your loved ones what kind of medical care you would want if you were to become terminally ill and/or permanently unconscious, and couldn’t make or express your wishes due to medical incapacity. You should understand that a living will is not binding under Michigan law. However, you should have one anyway. Why?

If you are incapacitated and can’t express your wishes, someone you care about will have to make those decisions for you. Those may include decisions about whether to continue or withdraw treatment that could extend your life. Those are difficult choices to make in any case. When your agent is uncertain about your wishes, such decisions are agonizing. By creating a living will, you give your loved ones the confidence that the difficult decisions they are making on your behalf are the ones you would make for yourself if you could.

“Do Not Resuscitate” (DNR) Order

A “Do Not Resuscitate” order is a form signed by you or your patient advocate stating that if your heart or breathing stops, no efforts should be made to resuscitate you. Many people choose to sign a DNR order because resuscitation efforts can be painful and may not extend life for long or in a meaningful way. People who sign a DNR usually do so because they want to be allowed to pass away peacefully.

A DNR must be signed by you or your patient advocate, your doctor, and two witnesses. An advantage to having a DNR is that it is right in your medical file in case the question of whether to resuscitate arises.

If you make a DNR, you can revoke it later if you change your mind, just as you can with a financial or medical power of attorney.