What happens to your wills and trusts when you are injured?
When you are in incapacity, a lot of issues can happen to you and your properties. Incapacity usually refers to the individual getting injured from an accident, health problems, or mental illness. The incapacity can be temporary or permanent depending on how serious the accident is.
When you are incapacitated, it’s less likely you are able to conduct business and run family affairs as you are not in your top form. Having a will isn’t going to help you either. Wills can only help when you have passed away.
Owning a joint property will not help as some asset owners must sign to sell or refinance it. Having the power of attorney in place can be an effective planning tool to handle your affairs.
The only issue with your power of attorney is that if you don’t have one, your assets (like your banks, for example) will not accept it. Then, a probate court will have to get an appointed someone to manage those assets for you.
What happens when you get incapacitated?
Most times, incapacitated individuals will ideally prefer that their partners to manage both their own and their partners’ side of assets. This is not always the case. The court will decide who will act on your behalf – who will represent you when you are gravely injured.
After you have appointed a power of attorney, s/he will appoint someone else to act on your behalf. It can be a family member, a relative, or even a total stranger. The court will also control how your assets are used to care for you until you have recovered or passed away.
This particular process is called a guardianship or conservatorship. It can get very expensive at times – if your family members and your partner fights over who should look after you. It’s embarrassing as much as it is time-consuming. Sometimes it can be difficult for it to end. At the same time, it does not replace probate at death. Unless you plan ahead, your next-of-kin will have to go through the probate court system twice.
The bottom line here is that if a court has to appoint a representative or a caretaker of your assets when you are incapacitated, then you know what it means. It will be less likely that your family member or relatives be appointed as your representative. Having said that, before anything happens to you, it’s best that you appoint someone you know very well to represent you.
Get a revocable living trust
A revocable living trust is one that takes ownership of your property while allowing you to continue managing it during your lifetime. It’s an essential incapacity planning tool and is important to ensure the trust is properly handled. It can help you to transfer your assets into the trust or retitling those assets in the name of the trust.
Before you get incapacitated, you can designate a successor trustee to manage the trust assets. For it to be effective, the trust document should include a provision that establishes a process for determining the trust maker’s incapacity and instructions. If not, court intervention may become necessary later on.
Before anything serious happens to you, make sure you have your wills and trusts planned out necessarily. When something serious has happened to you, things will be too late for you. If you need any help with planning for incapacity for your trusts and wills, do not hesitate to contact us.