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Myths & FAQs: Incapacity Planning

Posted by Mona O'Connor | Jun 06, 2024 | 0 Comments

Myths and Frequently Asked Questions

Incapacity Planning

Myth 1: I do not have to worry about becoming disabled or unable to manage my financial and personal affairs because I am young.

Reality: Anyone can become disabled, at any age. While the odds of disability increase with age, it is not a possibility that young people should ignore.

People frequently underestimate their chances of becoming disabled. Most people believe the odds of long-term disability are just 1 or 2 percent, when in fact 25 percent of 20-year-olds will become disabled before they retire.[1]

There are more than 42 million disabled Americans—around 13 percent of the population.[2] The highest percentage of people with disabilities is in the 65-and-over population.[3] According to the Department of Health and Human Services, more than half of Americans turning 65 today will develop a disability like Alzheimer's disease or Alzheimer's disease-related dementias serious enough to require long-term services and support.[4] At age 45, the lifetime risk for Alzheimer's disease is 1 in 5 for women and 1 in 10 for men.[5]

While not every disability will lead to your becoming unable to manage your own affairs, and the odds of you becoming unable to manage your own affairs may be relatively low, if an injury or illness is bad enough, it is important to have a backup plan so that someone you trust can step in to make your medical and financial decisions for you if necessary.


Myth 2: My spouse will be able to act on my behalf if I am unable to.

Reality: Your spouse does not have legal authority to make decisions for you if you are unable to manage your own affairs unless you expressly give them such powers in your estate plan.

You may want your spouse to take control of your finances and healthcare on the off chance that you suffer a permanent or temporary injury or illness that leaves you unable to manage your personal and financial affairs. The way to give them this control is by naming them as an agent in your medical and financial powers of attorney and naming them as a trustee or backup trustee in your revocable living trust.

Absent documents that authorize them to step in and manage your affairs when you cannot, your spouse will have to petition the court to become your guardian for your medical care and your conservator for your financial and legal affairs. There is a good chance that the court would grant this petition, but it is not guaranteed. Other family members could step forward wanting to be named your guardian or conservator, and the court could choose somebody else. But even if your spouse is ultimately appointed guardian and conservator, it could take weeks or months for the appointment to take effect.

In the meantime, you might be stuck in legal limbo. And once appointed, guardians and conservators must follow court orders and state laws when making decisions. Lacking your explicit consent to act on your behalf, a guardian's and conservator's hands will always be somewhat tied.


Myth 3: I can act for my adult child if they cannot act for themselves.

Reality: Without documents like financial and medical powers of attorney, the parent of a legal adult child has no implicit right to make decisions for their child.

Almost all states set the age of legal majority at 18 years old. At that age, an individual has full legal control over their decisions. Outside of a court order, the only way to cede that control to their parents or share it with them is through legal documentation (i.e., naming a parent as an agent who can make financial decisions for them under a financial power of attorney or healthcare decisions for them under a medical power of attorney). These documents can be extremely helpful when adult children go away to college and may need medical treatment or a parent to assist with finances or legal matters.

It is recommended that everyone 18 and older have an estate plan that includes these documents to address who can act on their behalf. Consider talking to your adult child about the importance of estate planning, and if they have any questions, you can have them contact our office.


Myth 4: Estate planning is just about death planning.

Reality: Estate planning affects not only what happens when you die but also what happens during your lifetime if you become unable to manage your own affairs (also known as becoming incapacitated).

Without an estate plan, state law and the courts determine who receives what from your estate. Your money and property could end up going to family members you do not get along with or who do not need it as much as others.

A lack of estate planning also means that the state will choose who will manage your affairs for you while you are incapacitated. While you may not care about who gets your money and property when you are dead, you might care very much about who makes these very personal decisions for you while you are alive. That is why you need to address incapacity planning in your estate plan.


Myth 5: I can address incapacity planning when the need arises.

Reality: Incapacity (the inability to manage your personal and financial affairs) can strike at any time. By the time it does, it is already too late for incapacity planning.

Incapacity planning presents a catch-22 for the incapacitated because if you lack capacity, you do not have the legal standing needed to execute powers of attorney and other documents.

You therefore must address incapacity planning now—when you are of sound and capable mind. For those with Alzheimer's disease or dementia, the door may already be closing on the chance to execute incapacity planning documents. You may need a physician to verify your legal capacity before you sign anything. Among younger people, there might not seem to be any urgency to plan for incapacity—until it happens.

Putting off incapacity planning is a huge risk. Your life can change in an instant. You cannot prepare for everything, but you can be as ready as possible with a comprehensive estate plan that addresses end-of-life care, medical and financial decision-making, and other incapacity issues.


Question 1: Isn't disabled the same thing as incapacitated?

A: In the estate planning world, the term incapacity refers to the inability to manage day-to-day business affairs such as making medical decisions, managing and protecting your accounts and property, signing papers, paying bills, and filing taxes. Incapacity in this context does not mean you are laid up on the couch with a bad back or have another ailment that is purely physical in nature. Rather, it means that you do not have the mental capacity necessary to manage your personal affairs.


Question 2: How can I be sure to stay in control of my property and finances if I become unable to manage my own affairs (incapacitated)?

A: There are two options for maintaining control of your property and finances when you cannot manage them yourself: a financial power of attorney and a revocable living trust. We often recommend using both.

A financial power of attorney is a legal document that gives the person of your choosing—known as an agent—the authority to pay bills, make investments, file tax returns, buy and sell real estate, and address other financial matters that are described in the document. In some states, the power of attorney can be set up so that the agent takes control of your finances only when you cannot act—not before and not after you regain capacity.

A revocable living trust works somewhat like a financial power of attorney, but the agent's authorized powers extend only to money or property that is held in a trust. Typically, when a person (the trustmaker) sets up a revocable living trust, they manage the trust's accounts and property as the current trustee. They will likely name a successor or backup trustee to take over trust management when they cannot or do not want to act, or upon their death. The successor trustee would serve in this role until the trustmaker regains capacity. A well-drafted trust agreement may provide its own definition of incapacity and will spell out how the successor trustee is to distribute funds during the trustmaker's incapacity and to whom. If the incapacity is permanent and lasts until the trustmaker's death, the trust will describe how to distribute the trust's accounts and property after death, thus making a revocable living trust a multipurpose estate planning tool.


Question 3: How do I avoid being kept alive by machines if I am brain-dead?

A: A living will can be used to avoid so-called heroic-measure medical interventions that are aimed at keeping a person alive when they are in a permanently unconscious condition or in an end-stage condition. Common examples of these life-sustaining treatments are ventilators and feeding tubes, but they can also include CPR, IVs, and even antibiotics.

In your living will, you can specify medical treatments that you do and do not want to be used to keep you alive, as well as your preferences for other medical decisions, such as organ donation and pain management. Separately, you can talk to your doctor about having do not resuscitate (DNR) and do not intubate (DNI) orders in your medical record, although in some states these orders can be included in your living will.

A living will is not recognized in all states, so it is important that you work with an experienced estate planning attorney to ensure that your wishes are carried out legally and effectively.


Question 4: Who will make healthcare decisions for me if I cannot make those decisions myself?

A: Your agent under your medical or healthcare power of attorney has the power to make healthcare decisions for you if you are unable to make or communicate those decisions yourself.

A medical or healthcare power of attorney is a document that names a designated decision maker (i.e., a healthcare agent) to act on your behalf if you become unable to make or communicate your medical wishes.

A comprehensive healthcare power of attorney will contain provisions authorizing your healthcare agent to obtain and review medical records about you and make all of your healthcare decisions, including decisions about treatment, surgery, home healthcare, and end-of-life care. You can give your agent total healthcare authority or set limits on their power. You can also state how you want decisions to be made. Additionally, you should name a backup agent who can step in if the primary agent is unwilling or unable to serve in this role.


Question 5: Who will take care of my finances if I become unable to manage them?

A: If you have an up-to-date financial power of attorney, the named agent may be able to manage your finances, including paying your bills. Unfortunately, if you do not have a legally documented plan, your loved ones may wage a legal battle over who will act as your financial decision-maker, and a judge will decide who gets to be in charge. It is important to note, however, that because financial power of attorney documents can sometimes be turned down by some financial institutions, we recommend a revocable living trust that addresses what will happen if you are unable to manage the trust's accounts and property as part of a comprehensive estate plan. Having both documents will provide you with a layered approach to making sure the person you trust will be able to take care of your financial and legal needs when needed.

Tip: Be sure to name a backup agent in case your first choice is unable or unwilling to serve. We recommend backup successor trustees in your revocable living trust as well in case your named trustees are unable or unwilling to serve when the time comes.





For a PDF version, please click here or visit the “Resources” tab from our website.

[1] The Faces and Facts of Disability: Facts, Soc. Sec. Admin., (last visited Mar. 20, 2024).

[2] Katrina Crankshaw, Disability Rates Higher in Rural Areas Than Urban Areas, U.S. Census Bureau (June 26, 2023),

[3] Id.

[4] National Plan to Address Alzheimer's Disease: 2022 Update, ASPE (Dec. 20, 2022),

[5] Alzheimer's Disease Facts and Figures, Alzheimer's Ass'n, (last visited Mar. 20, 2024).

About the Author

Mona O'Connor

Mona L. O'Connor joined the firm in 2008 and is currently a partner with O'Connor Law Offices. She is a J.D., C.P.A. and her primary areas of practice include estate planning and trust administration.


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