If you’re like many retirees, or soon-to-be retirees, you’re likely busy planning what you will do with all of your newfound free time. You also may be developing a budget and planning an income strategy to fund your lifestyle.
Income isn’t the only thing to plan for in retirement, though. You may also want to plan for something called incapacitation. What is incapacitation? It’s simply a state or condition in which you don’t have the capacity to make decisions for yourself. You’re reliant on others to handle your finances and consult with your doctors about medical issues and decisions.
Incapacitation may not be pleasant to think about, but it’s too important to ignore. Given the prevalence of cognitive conditions like Alzheimer’s, it’s possible incapacitation could become a reality for you. Any condition that restricts your ability to communicate your wishes could be a potential threat of incapacitation.
The good news is there are steps you can take today to plan for incapacitation. There are several documents that can protect your assets, your legacy and your wishes with regard to your medical treatment. Below are three documents and strategies you may want to discuss with your financial professional or your estate-planning attorney.
A living will is a document that informs doctors and other medical professionals about your wishes with regard to lifesaving treatments. A living will lays out specific life-threatening conditions and then asks you how you would like to be treated.
For example, a living will may state you do not want your life to be saved if you’d be reliant on a breathing machine or a feeding tube for the rest of your life. Doctors would then use that information to guide their treatment and decision-making.
Power of Attorney
There are actually two different types of powers of attorney, although you may want to assign the same person to serve in both roles. The first is the general power of attorney, in which you designate a trusted friend or family member to make all financial decisions on your behalf should you become incapacitated.
Your power of attorney can execute any financial decision you can execute for yourself. They can withdraw money from accounts, pay bills, take out loans and more. Obviously, your power of attorney should be someone you trust.
There’s also a health care power of attorney. It’s similar to the general power of attorney, except health care powers of attorney only make medical decisions. They consult with doctors on your behalf and make decisions regarding your care and treatment.
For simplicity’s sake, you may want to designate the same person to both roles. That way, they can have a clear view of both your financial and medical situations.
Another way to protect your assets is to name a joint owner on the asset’s title. If you become incapacitated, the joint owner can continue to make decisions and manage the asset in your absence.
This strategy can work particularly well if you know you want to pass a specific asset on to an individual after you die. You name them a joint owner, allowing them to manage the asset if you’re unable to. Then, after you pass away, they take over full ownership of the asset.
Of course, once you name a joint owner, they have full ownership rights immediately. Be sure you can trust the person with that responsibility before you put them on the title.
Incapacitation certainly isn’t one of the more pleasant aspects of retirement planning, but it’s something that should be addressed. For more information, contact us at Gregory Financial Group. We can help you develop a plan to protect your wishes, your assets and your loved ones.
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