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You’ll likely come across the term “incapacitated” while planning with an attorney for your future and addressing challenges that may come along with aging. In this post, I’ll write about how incapacity is defined as well as what can cause it, and next week I’ll write about what this concept means in relation to elder law and estate planning.

Incapacitated Definition

When someone is incapacitated, they are unable to make personal decisions or understand legal documents. A person who is incapacitated requires someone to make decisions on their behalf. Individuals such as an agent under a health care power of attorney or a guardian might be the ones to make decisions for a person who is incapacitated.

In the last post, I shared several reasons people often have for not including a charitable bequest in their estate plan. Here are five more reasons people may have for not including this as part of their estate plan along with reasons why a charitable bequest might be a better option than one may realize:

If the organization dissolves, so will my money. Although there is no way to know where any organization or person will be in a decade or several decades, there are options if you are worried that your favorite organization may not still exist in the future. These options include directing your bequest to go to an alternate organization if your first organization is no longer around or to have your bequest go to a general cause.

My children come first. It is important to make sure your children are taken care of. If possible, consider leaving only a portion of your estate to charitable causes. Doing so ensures that your children are provided for and also communicates a powerful statement about your charitable values.

According to a number of surveys, about 60% of Americans give to charity annually. However, less than 10% of wills and estate plans include a charitable bequest. Here are some common reasons people may have for not including a charitable bequest in their estate plan as well as why making this a part of your estate plan may still be worthwhile:

I give annually. If you already give to charitable organizations annually, that is excellent. Regular giving keeps the doors of these organizations open. That being said, a charitable bequest can ensure that your support of this organization continues even after you’re gone.

I don’t want publicity. Although most nonprofits publish legacy donors to say thank you and to inspire others to do the same, you can let the charity know that you want to remain anonymous if you do not wish to draw attention to your generosity.

An effective estate plan is like a finely-tuned machine, and it needs regular maintenance to make sure it operates harmoniously in the face of life’s changes and challenges. An estate plan should be revisited every few years as well as after any major life change to make sure it is still aligned with your current life goals, circumstances, and wishes.

Here is a checklist to help guide you through regularly reviewing an estate plan:

1. Updated Information

In last week’s post, I shared tips for making sure your loved ones will be able to find your estate planning documents when these documents are needed. Issues can also arise when it comes to finding the assets of someone who has passed away. It is common for one spouse to handle finances while the other spouse does not know the details of the assets they own. Often, we also don’t know what assets our parents, grandparents, and other family members own.

Wills are usually drafted broadly and do not list every asset a person owns because the stuff we own on the day we die will be different from what we had the day the will was made. Typically, some things will still be the same, but it’s common to buy and sell vehicles and property, save and spend money, and change banks, insurance policies, or other types of accounts.

Also, although there are search tools for some assets, such as real property, business interests, and vehicles, there is no centralized search tool that lists every asset a person owned.

You may want a guardian to be appointed for your family member or loved one who has been experiencing memory loss and/or whose decision-making process has been impaired. It’s difficult to see this happen to someone you love, and you may be struggling with how to find the best way to help them. A declaration of incompetence is required for a guardian to be appointed, and determining if someone is at the point of being incompetent to make their own decisions is a complicated process.

When someone becomes unable to make decisions for themself, the court may appoint a “guardian” or “conservator” to make decisions for this person. A guardian is only appointed if a power of attorney or another less restrictive alternative is not in place or is not working.

The standard for being deemed in need of a guardian varies between states, and depending on the state, the standards for a complete guardianship vs. a conservatorship only over finances may be different. In general, someone is determined to require guardianship when they show a lack of capacity to make responsible decisions or decisions in their best interests.

Elder law and estate planning serve two different but important purposes. While elder law focuses on preserving your wealth and promoting your well-being during your lifetime, estate planning concentrates on what happens after you have passed away.

Elder law planning helps to ensure that seniors can live as long, healthy, and financially secure lives as possible. It involves planning for future medical needs and long-term care. Elder law attorneys can assist you with creating a plan to pay for future care while maintaining your assets or to qualify for Medicaid or other benefits to pay for long-term care. Elder law planning also serves to protect you from elder abuse or exploitation when you get older or become incapacitated. In addition, elder law covers assistance with guardianship and conservatorship.

Unlike elder law which focuses on older individuals, estate planning is for people of every age. Estate planning attorneys help you plan for what will happen to your assets after you die. They use documents such as wills and trusts to ensure your wishes are carried out properly. Estate planning also includes naming a guardian for your children or making plans for the caretaking of your pets. Estate planners can also help you avoid probate and save on estate taxes.

There are a lot of options in online services to draft estate planning documents, such as wills, trust, durable powers of attorney, and healthcare proxies. These online services can appear to be a very good option for most people. With these options available, is it necessary to use an estate planning attorney?

An effective estate plan combines learning from the past, adapting to the present, and anticipating the future. While these document generators codify learning from the past through processes and procedures and have some elements that adapt to the present, they do not provide a way to anticipate the future in the way that a professional advisor can.

An estate planning attorney can help you to anticipate the cause and effect relationship between the choices you make today and the effect it may have on your future goals and objectives. They can also help you to identify what might prevent you from achieving your objectives, to determine the likelihood of these things happening, and plan for what to do if they occur.

The Social Security program, in addition to providing retirement benefits, also provides disability payments to those who are unable work because of a physical or mental condition. Unfortunately, the process that applicants (who are often older and poorer than most Americans) have to go through in order to start receiving these benefits can sometimes take years.

According to a new report from the U.S. Government Accountability Office, which is a nonpartisan federal agency, nearly 110,000 people died from 2008 to 2019 while waiting for an appeal after initially being denied Social Security disability benefits.  Additionally, 50,000 people who were waiting for their cases to be resolved filed for bankruptcy between the years of 2014 and 2019.

The median wait time for the appeals process was 506 days last year, and rose as high as 839 days in 2015, according to the U.S. Government Accountability Office.

Over half of all Americans give money to charity, but many have not been able to take a tax deduction since a 2017 change in the tax laws. However, with the new CARES Act, most American taxpayers will be able to take a tax deduction for charitable giving again. The details are as follows:

Section 2204 of the CARES Act allows eligible individual taxpayers to deduct up to $300 of qualified charitable contributions made during the taxable year.

Only cash donations qualify, so donations such as clothing, stocks, automobiles, or other items cannot be counted toward this. This is also only for taxpayers who take the standard deduction, as the majority do. Those who itemize their deductions cannot take this new $300 deduction.