How to Plan for Incapacity

A trust is a good way to plan for incapacity. Aging is inevitable—it is important to take care of yourself and family before your capacity diminishes. The revocable living trust can be changed or amended in accordance to your needs. It is just one-way to plan for incapacity.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• Attorney
• Financial advisor
• Assets
• Beneficiaries

1. Consult an attorney and discuss trust options. There are three kinds of trusts: living, testamentary and revocable.

2. Select a trustee. Consider an unconditional co-trustee who will take over for you when you are no longer capable.

3. Present the idea of a co-trustee to your family. Discuss the function of a co-trustee.

4. Make it clear to your family and the co-trustee that if you recover from the diminished capacity you will regain control of the trust.

5. Decide with your attorney and family if it is best to give up power of attorney to someone you trust. Power of attorney is reversible.

6. Give gifts up to $10,000 a year per beneficiaries to reduce the tax burden on your estate.

7. Plan for long-term health care costs. The creation of a trust is the best way to protect your assets from this expense.

Tips & Warnings

• Seek professional advice when estate planning.
• Dumping assets to have Medicaid cover the cost of an illness results in serious consequences.

Resources

• Define incapacity.
• Incapacity planning.

Who Can Help Sponsored