By Kristin Carlton, CFP®, Partner & Senior Wealth Advisor
Most of us recognize the importance of having a will to document how we’d like our assets to be distributed upon our death. However, we often overlook planning for worst-case scenarios like severe mental decline, car accidents and strokes that could render us physically or mentally unable to make or communicate decisions.
Experiencing such an emergency with my family gave me an even greater appreciation for proper incapacitation planning — preparing for a trusted individual to manage your affairs and finances in the event that you cannot do so. Taking a few key steps now will enable loved ones to best care for you if needed and prevent unnecessary, additional stress during that difficult time.
The checklist below will help ensure your estate and incapacitation plan is in order:
1. Create estate planning documents.
√ Meet with an estate planning attorney to draft your will which may include a handwritten list of special personal bequests.
√ Name a durable power of attorney to manage your finances and a medical power of attorney to make health care decisions for you if you are not physically or mentally able to do so.
√ Your attorney should also prepare HIPAA authorizations, health care directives to physicians, and if applicable, do-not-resuscitate orders.
√ Remember, if you have children over the age of 18, they should have their own documents prepared as you will need permission to act on their behalf.
2. Work with financial professionals to secure long-term care insurance.
√ We recommend obtaining a policy between the age of 50 – 60 with a minimum annual 3% compound inflation. This protection increases the value of your benefits to account for rising health care costs.
√ The typical elimination period is 90 days, meaning the length of time between the onset of illness and receipt of benefits.
√ Payout periods should cover at least three to five years — the average length of a nursing home stay.
√ Select a policy with fixed premiums to avoid costly increases over time.
√ Hybrid policies are available for spouses with benefits for both life insurance and long-term care.
3. Organize all important information in a safe place. In addition to estate planning documents, this should include:
√ Birth and marriage certificates, Social Security card, passport and military paperwork.
√ Outline of monthly income, outstanding debt, monthly expenses and whether they are set up for auto-pay.
√ Clean list of passwords and answers to security questions for phone, email, social media, Amazon, Apple, Venmo, subscription services, banking and credit freeze PINs. Make sure to include the PIN used for your cell phone provider when you call (the cell provider was one of the most difficult for my family to access without the PIN).
√ Consider adding a trusted contact to your accounts to ensure they have access. Even spouses are not authorized to make changes to certain accounts like IRAs without permission.
√ Contact information for your CPA, financial advisor, bank and attorney.
√ Financial profile or net worth statement listing all assets and liabilities.
√ Insurance policies — auto, home, supplemental health, long-term care, life and disability. If a claim needs to be made, having all policies in one place will help organize and limit confusion.
√ Details on annuity contracts or pension plans.
√ List of doctors, current medications and your preferred assisted living facilities.
√ Personal wishes for funeral arrangements and cemetery plots.
4. Institute checks and balances on family members to monitor for early signs of mental decline.
√ Review your credit reports periodically for incorrect contact information, unusually high balances or new accounts.
√ Occasionally, alternate paying the bills to stay sharp and keep a close pulse on your spouse’s mental acuity. Single adults should enlist a trusted loved one to do the same.
√ Review your bills and tax returns in detail, even if you are not the person in your home who usually handles these tasks.
5. Communicate the following information with back-up agents and executors:
√ Where to find all of this information (for example, green folder in my right desk/dresser drawer).
√ Send them a picture of the medical power of attorney and HIPAA authorizations to store on their phone, so there is always a hard and electronic copy easily accessible in case of emergency.
√ Where to find the hidden key or alarm code to get into the house (and the password if the security company calls).
√ How to access your safe, which bank your safe deposit box is located and where the key is.
√ How to log into your computer.
As you can see, planning for not only death but incapacitation goes far beyond drafting a will. While it can be unpleasant to consider these worst-case scenarios, it’s always best to be prepared for all possibilities. For more information on incapacitation planning, check out Peace of Mind Planner and speak with your Exencial advisor.
Exencial Wealth Advisors is an SEC registered investment adviser. Any references to the terms “registered investment adviser” or “registered,” do not imply that Exencial or any person associated with Exencial has achieved a certain level of skill or training.