How to Choose the Right Agent for Your Incapacity Plan

Choosing the Right Agent for Your Incapacity Plan

Most people think that estate planning equates to death planning. While planning for death is certainly a critical factor, planning for what happens after you die is only one piece of the estate planning puzzle. It is equally important to plan for what happens if you become mentally incapacitated and are unable to handle your financial or health care decisions.

What Happens Without an Incapacity Plan? 

Without a comprehensive incapacity plan, your family may need to petition a court so that a judge can appoint an agent (known as a guardian or a conservator) to take control of your assets and make all personal and medical decisions for you under a court-supervised guardianship or conservatorship. The guardian or conservator must report all financial transactions to the court, usually on an annual basis.  The guardian or conservator is also typically required to obtain court permission before entering into certain types of financial transactions (such as mortgaging or selling your real estate) or making life-sustaining or life-ending medical decisions.  The court-supervised guardianship or conservatorship will then continue until you either regain capacity or die. As you can imagine, this can be a costly endeavor and is easily avoidable.

Who Should You Choose as Your Financial Agent and Health Care Agent?

As you can see from the above discussion, a guardian or conservator has an important and involved role if you become incapacitated.

Creating an incapacity plan can help you order to avoid a court-supervised guardianship or conservatorship. 

Rather than having a judge - who knows nothing about your family - decide, your incapacity plan will have you appoint one or more agents to carry out your wishes. There are two very important decisions you must make when putting together your plan:

  1. Who will oversee management of your finances if you become incapacitated (your financial agent); and
  2. Who will oversee making medical decisions on your behalf if you become incapacitated (your health care agent).

Factors to consider when deciding who to name as your financial agent and health care agent (who do not have to be the same people) include:

·  Where does the agent live?  With modern technology, the distance between you and your agent should not matter as much as it once did.  However, someone who lives nearby may be a better choice than someone who lives in another state or country.

·  How organized is the agent? The agent will need to be well organized to manage your health care needs, keep track of your assets, pay your bills, and balance your checkbook, in addition to being able to manage their own finances and family obligations.

·  How busy is the agent?  If the agent has a demanding job and works long hours, or travels frequently for work, then the agent may not have the time required to take care of your finances and medical needs.

·  Does the agent have expertise in finance or the health care field?  An agent with work experience in finances or medicine may be a better choice than an agent without it. Moreover, an agent with work experience in medicine may be better equipped emotionally to handle the sensitive issues that may arise when making healthcare-related decisions.

·  Is the person trustworthy? This may go without saying, but the agent you select needs to be someone you trust completely without any hesitation. This is someone who could hold your financial life or your actual life in their hands. Read on for a cautionary tale in selecting a trustworthy individual as your attorney-in-fact.

What Should You Do?

The most common choices clients make for health care agents and attorneys-in-fact are (1) spouses; (2) adult children; or (3) siblings. At the end of the day, you want to sleep better knowing who you have chosen will handle things efficiently while keeping the best interests of your family in mind.

If you choose the wrong person to serve as your financial agent or health care agent, your incapacity plan is likely to fail and land you and your assets in a court-supervised guardianship or conservatorship.

Perhaps worse is the case where you choose the wrong attorney-in-fact and they abuse the power given to them. A prime example of this is famous hockey player Jack Johnson. He appointed his parents as agents on his power of attorney documents. They allegedly took out loans against his future earnings without his knowledge and ultimately landed him in bankruptcy. You can read more about that case here and here.   

In order to create an incapacity plan that will work the way you expect it to work, you need to carefully consider who to choose as your agent and then discuss your decision with that person to confirm that they will in fact be willing and able to serve.

Contact Minnesota estate planning attorney Zach Wiegand and Gold Leaf Estate Planning, LLC at (952) 658-6503 today to arrange an initial consultation to discuss the specifics of your situation and to ensure that you have the right incapacity agents selected for your estate plan.