When you think of estate planning, you probably think of wills and trusts – the ways people decide how their property should be distributed after they pass away. This is known as testamentary planning. It is a very important goal of estate planning. However, there is another side of estate planning that addresses what will happen to both you and your belongings later in life should you one day lose the capacity to make your own decisions. This is known as incapacity planning. A comprehensive estate plan will involve both testamentary planning and incapacity planning.
What is Testamentary Planning?
Testamentary planning is the classic form of estate planning. During this process, you will decide who should receive your property when you are gone. The two most common instruments for testamentary planning are wills and trusts. In modern times, trusts are increasingly becoming the preferred vehicle for transferring assets. They offer a number of advantages, most notably by allowing you to bypass probate.
However, parents and guardians of minor children will generally be advised to use a will in addition to any trust, as it is through a will that an alternate guardian can be named for the children.
What is Incapacity Planning?
Where testamentary planning lets you express your wishes after death, incapacity planning lets you express your wishes after incapacity. Most people will face incapacity later in life, often due to an age-related illness. It is smart to express your desires in advance regarding the nature of medical treatment you would want in a variety of situations.
Generally, incapacity planning consists of both powers of attorney and living wills or advance directives. Living wills let you make very direct decisions, like whether you would want life-prolonging care for a terminal illness. Powers of attorney allow you to choose someone you trust to make medical decisions on your behalf in the event that your living will does not govern a particular situation. You can also limit the scope of this person’s power by explicitly stating what they may and may not consent to on your behalf.
It may also be wise to create financial powers of attorney that would allow someone else to step in and start managing your finances. Someone may need access to your bank account and benefits or retirement accounts in order to keep paying your expenses for you. Incapacity planning, when done well, allows for a very smooth and painless transition when the time comes.
Contact an Illinois Estate Planning Attorney
A. Traub & Associates builds strong, thorough, comprehensive estate plans. Our Lombard estate planning lawyers’ goal is to cover all your bases so that you are prepared for any possibility. Call 630-426-0196 to schedule a confidential consultation.