One of the most important benefits of revocable living trusts for you during your lifetime is incapacity planning. Incapacity (or disability) can occur at any time; and, it often arises unexpectedly. A stroke, car accident, or head injury can leave you unable to manage your day to day business affairs and financials.
You Determine the Definition of Your Disability
Your revocable living trust will define your disability so that it’s clear when authority passes from you to your named disability trustee. You, with legal counsel, create this definition of disability yourself.
You Choose the Disability Panel Participants
If you choose to have a disability panel determine whether the definition of your disability has been met, you also choose who is on this panel. Often, the panel is composed of medical professionals and loved ones.
You Appoint Successor Disability Trustees
You choose who will succeed you as trustee. You stay in control by choosing who has authority and when they have it. You name contingent disability trustees as well, to serve in the event your primary disability trustee is unable or unwilling to serve.
You determine how your assets will be managed, your care, and who can use your assets during any period of disability. Your disability trustee must follow these directions. Think of your trust as an instruction book.
Your Disability Trustee’s Authority
Your disability trustee only has authority over assets that are funded into your trust. It is imperative that you follow your estate planning attorney’s instructions and fund all applicable assets into your trust.
You Need a Power of Attorney Too
Because there are some assets (such as life insurance and retirement accounts) that are not funded into your trust, you need a financial power of attorney so that your power of attorney agent can manage these assets. It is prudent to make sure that the applicable institutions will honor your power of attorney; if not, execute one of theirs as well.
Where to Get Help with Incapacity Planning
Consult with a qualified estate planning attorney for the design, drafting, execution, and funding of your revocable living trust. It’s important to get the incapacity planning right so your estate plan works.