Deciding When Someone Is Incapacitated
Note: If you are involved in a conflict regarding yourself or a family member’s mental capacity, please note that the Law Office of Janet L. Brewer does not provide legal advice or representation in such cases.
Estate planning can be uncomfortable. Contemplating the end of your life is not easy. As difficult as it is, however, many people would rather plan for death than for incapacity.
The simple truth is that age, and many illnesses related to age, carry the potential to rob you of your ability to make sound decisions. When you draft a revocable living trust, it’s vital to consider the potential for incapacity.
If your mental capacity is compromised, someone will need to step in. The backup trustee named in your trust will then take over.
But who makes the decision that you are incapacitated?
A disability panel is one way to decide whether you’re competent to maintain control over the trust. You can name a group of individuals in your trust who you can rely on to make the decision correctly.
Incapacity Is Not Unusual
Life expectancy has generally increased over the years. Long life might seem to indicate improved health, but it carries with it an increased risk of incapacity.
Several forms of disability become more common as we age. According to US Census data, in 2019, roughly 47 percent of people aged 75 and above reported a disability.
For people aged 21-64, the number was only 10.5 percent. Cognitive disabilities were also tied to age, with people over 75 suffering at nearly 3 times the rate of younger Americans. According to the Alzheimer’s Association, one-third of people aged 85 and above suffer from Alzheimer’s dementia.
Tools to Protect You and Your Loved Ones
One of the most popular tools in estate planning is the living trust, sometimes referred to as a revocable trust. These trusts have several uses, including tax benefits, the ability to avoid probate, and the power to pass assets to beneficiaries when the time comes.
Perhaps the most important upside of a living trust is that they allow the trustmaker (i.e., the grantor, trustor, or settlor) to set rules about how the trust’s assets will be managed should the trustmaker become incapacitated, whether through illness, injury or as the consequence of advancing age.
Living trusts often name the trustmaker as trustee. That means the person forming the living trust is responsible for trust administration duties, including proper accounting and the filing of tax returns.
Some living trusts include a spouse or associate as co-trustee, splitting the responsibility of trust management between the two parties.
In the absence of a co-trustee, a successor trustee, who will fulfill the duties of the trustee when the trustmaker passes away or becomes incapacitated, should be listed in the trust document.
Some trustors choose two people to fulfill the roles: successor incapacity trustee (upon the trustmaker’s incapacity) and successor death trustee (upon the trustmaker’s death).
A living trust allows the trustmaker to provide a definition of incapacity to help the decision-maker. That information can help prevent confusion about whether to move control over the living trust from the trustmaker to the co-trustee or successor trustee.
The definition of incapacity can rely on an existing test, such as the General Practitioner Assessment of Cognition screening test, or other evaluation criteria.
A living trust also allows the trustmaker to select the person or people who get to decide whether the conditions are correct for control over the trust to change hands. The decision-maker can be the court, a medical professional, or a disability panel chosen privately by the trustmaker.
Like the name implies, a disability panel is a group of people selected specifically for the purpose of deciding whether the trustmaker is incapacitated. The trust documents can name the members of the panel in advance, as well as determining whether they must be unanimous in their decision.
Potential Benefits of a Disability Panel
While doctors and the court likely have extensive experience with disability determinations, trustmakers may prefer a disability panel for several reasons. Some of the benefits of a disability panel include:
- The panel members can be people who know the trustmaker personally, helping them identify signs of diminished capacity.
- Multiple perspectives – personal, medical, and financial – can help ensure that the competency decision is made correctly.
- Using personal connections can save money, as the legal system will not be needed to make the determination.
- A disability panel can move more quickly and avoid the administrative pitfalls common to the estate planning system.
Estate planning is a vital tool for protecting your legacy and securing your future. Disability panels help by giving the trustmaker the power to select who makes the decision about potential incapacity.
Creating a disability panel in the trust documents removes worries about an unconcerned court or unfamiliar doctor deciding when the trustmaker has lost the mental capacity to oversee the trust.
Careful Estate Planning Is Key
A disability panel is not the only part of an estate plan that involves issues of incapacity. The living trust works together with powers of attorney and advanced healthcare directives to help a person maintain control over what happens to them as they age. Disability panels play an additional important role in that process.
The control a trustmaker exerts over the members of the disability panel and the guidelines they must follow is invaluable. Making these decisions while health and mental capacity are intact is the right path to take.
An experienced estate planning attorney can help you craft a disability panel that meets your needs. The right guidance can help you pick people who have the right credentials and knowledge to make and support decisions about incapacity.
If circumstances change in the future, the details of the revocable living trust can be amended to reflect the new reality.
At the Law Office of Janet L. Brewer, we can help you create a living trust and disability panel that secures your future.
Note: If you are involved in a conflict regarding yourself or a family member’s mental capacity, please note that the Law Office of Janet L. Brewer does not provide legal advice or representation in such cases.
To learn more about your estate planning options, call our Los Altos office at 650-850-5889 or contact us online.
