End of Year Checklist: updating your incapacity plan

| Dec 21, 2020 | Estate Planning |

With 2021 around the corner, we wanted to give you a quick New Year’s Resolution to make sure your estate plan is up to date moving forward. Today we are covering what we refer to as the incapacity plan, which consists of the financial durable power of attorney, the advance health care directive, and the HIPAA Waiver and Authorization. Next week, we will discuss the importance of updating your primary estate planning documents, such as your Trust or Will. Collectively, these documents are essential to every estate plan and it’s critical that you revise them regularly.

A financial power of attorney (a “POA”) appoints someone as your “Agent” to act on your behalf. If that Agent is unwilling or unable to act, the document oftentimes has backup choices as well. Your agent will essentially have the same powers you inherently already have yourself. The Power could be drafted to be “immediate”, which would mean your agent would have the power to make decisions regarding your financial assets right away and without regard to your ability to make those decisions for yourself. Or you could make the power “springing,” which means the agent would only have the legal powers upon your not being able to act for yourself because of incapacity.

Similarly, an advance health care directive, which in California combines the health care power of attorney and the living will (think “DNR”s and other end-of-life decisions, for example) into one document, appoints a primary agent and successor agents to make medical decisions for you when you are unable to do so for yourself. A HIPAA Power allows the representatives of your choosing to access protected health information.

Every year around the holidays, it’s a good idea to look at your financial and health care Powers of Attorney just to check if they name the people you’d want as your agents. Maybe one of your agents is no longer appropriate. Maybe the person whom you had listed as an agent is now too old or physically unable to act as your agent; maybe you had a falling out with the person you had named; maybe one of your minor children is now an adult and you’d like him or her to serve as your agent instead. There are all kinds of reasons you could decide you need to change the individuals nominated. At the end of the day, the agents you appoint in these documents are crucial to your incapacity plan and it is incumbent upon you to make sure you keep the right people in those roles.

Next week we will focus on the need to keep your trust up-to-date due to changes in your circumstances, your finances, your family, your wishes, and the tax laws!