Attorney James Jones: [00:00:00] Picture this one day through illness or accident, you wake up unable to make decisions for yourself. Your finances, your healthcare, and your future are all at stake. Who would take charge? Would they know exactly what you want in Washington state, incapacity planning is your safety net, ensuring your voice is heard even when you can’t speak.
Okay. Join us on today’s episode of Legacy Talk as we break down the critical steps to protect your assets, your health, and your peace of mind. From durable powers of attorney to advanced healthcare directives, we’ll explore how to prepare for life’s unexpected twists, and secure your legacy with confidence.
You are listening to the legacy talk podcast hosted by James A. Jones, attorney at law and founder of sound legacy law, PLLC in Tacoma. Attorney Jones is here to talk about how to best protect your family assets and well, pulling stories from his more than [00:01:00] 20 years of helping families and business owners protect their assets, create their estate plans, preserve their wealth and plan for the future.
Nobody wants to think about estate planning, but life has a way of sneaking up on you and. And at any moment, something unexpected could happen that will leave you regretting not having acted sooner. So join attorney James A. Jones in the Legacy Talk podcast and together learn how to plan for your future today and have peace of mind tomorrow.
Attorney James Jones: Welcome to Legacy Talk. I am your host, James Jones. On today’s episode, we are talking about incapacity planning preparing for the unexpected in Washington, and the moral of today’s episode is don’t wait until it’s too late. That’s the message of any story about incapacity planning, especially the bad ones.
The good ones are like this, John, who had a major cardiac [00:02:00] event and was completely incapacitated while he was on vacation. His wife Margaret, was overwhelmed with worry and uncertainty, but those were just her natural reactions that everybody has. She was comforted and empowered by the fact that she and John had set up their estate plan years before for situations just like this.
Through the durable power of attorney we set up, Margaret was able to talk to John’s doctors, make decisions for his care, and even have him transferred to the best hospital possible for his care. She was able to manage their affairs financially as well without any issues or hiccups because John and Margaret planned early and made arrangements for potential periods like this.
Periods of incapacity that were unexpected but planned for things were fine. Thankfully, the story ended happily for John and Margaret. John fully recovered. And the worst case scenarios with his health scare were avoided. Contrast that with Carol.
Carol suffered from [00:03:00] dementia. I met with her son Paul, who was concerned about his mom, who was living with a caregiver at the time, and sort of shutting the family out. At least Paul. Turns out the caregiver wasn’t giving much care. Carol’s house was in complete disarray. She had finger and toenails like the Guinness Book of World Records, if you can imagine that.
Not great. Also, Paul’s sister was stealing money from mom who knew. Of course, Carol didn’t have any planning in place. Paul petitioned the court to become his mom’s guardian. But because things were so bad, the court appointed a third party guardian over Carol and Paul and his other siblings lost control of their mom.
While her healthcare improved, it wasn’t an ideal situation far from it, but this is what can happen when you fail to plan. This happens more often than you would imagine. So today we’re talking about why it’s so important to plan for incapacity, not just your death, but when you [00:04:00] are unable to make decisions for yourself.
So understanding incapacity planning ensures that your financial and medical decisions are handled by trusted individuals if you’re unable to make them due to illness, injury, or your cognitive decline. So if your brain doesn’t work or you’re unconscious or your two out of it to make a decision, someone can step in.
Proactive decision making is important. Planning ahead prevents family disputes and ensures that your preferences are followed. A power of attorney and incapacity planning covers financial management, healthcare decisions, and even long-term care needs, and provides the peace of mind that you need, right?
We’re looking for peace of mind. Do we wanna have stress? All the time. I was just talking to my wife the other day, can you really stress about, or worry about things constantly and have a functioning, you know, psyche? I don’t know. Incapacity Planning brings peace of mind. It reduces stress for loved ones and yourself by providing clear instructions during a crisis.
So what [00:05:00] is the number one thing for incapacity Planning? A durable power of attorney. A durable power of attorney appoints someone that you trust to manage your finances if you’re incapacitated, and it’s only effective as you state in the document. So sometimes it’s effective. Immediately. Sometimes it’s effective.
When you’re incapacitated, it’s fully customizable, right? You can specify whether the agent handles all the finances or limited things like bill payments. Like I mentioned, it can be an immediate power of attorney or a springing power of attorney. Springing means it takes effect when you are incapacitated.
Immediate, of course, means it’s effective immediately. My personal preference is to have an immediately effective, durable power of attorney, and the reason why is because emergencies happen often at night and on weekends, and it’s very difficult to get someone declared incapacitated or get a doctor’s letter or something, which is often what is required on those springing powers of attorney to make them effective.
So if you don’t have the letter, if you don’t have the, the ruling from the [00:06:00] court, it’s not gonna work and it doesn’t actually solve the problem. In Washington, specific language has to be included in the power of attorney for it to do certain things like make gifts or deal with estate planning documents, or change beneficiary designations, things like that.
Those things have to be specifically be in place or specifically be included in there. And the durable power of attorney has to be notarized. That’s mechanical. It doesn’t really matter. The next document you should have is a durable power of attorney for healthcare, often called an advanced healthcare directive.
And that document is for healthcare decisions or medical decisions if you’re not able to make them. A part of that healthcare directive or advanced directive is a healthcare directive. Typically, I do a living or a, healthcare directive, and a durable power of attorney. Okay. The durable power of attorney that I typically do is one that covers finances and health, but sometimes you have different people that you want to have [00:07:00] over different decisions.
Someone wants a different person over healthcare than they do over finances, which is understandable. In that case, we do a healthcare directive or a healthcare durable power of attorney and a financial durable power of attorney. So another word for this event’s directive. Is a living will you hear about that?
And basically, this living will or advanced healthcare directive specifies your preference for life sustaining treatments, whether you want to maintain nutrition, hydration, those kinds of things. It can also include things like pain management. It can include things like organ donation. You select an agent to make these medical decisions for you, just like financial, but you wanna make sure that you choose someone that understands you, right?
They understand your values. They want to, they know what you want to have happen and that they can be an an advocate for you, right? You wanna make sure that there’s someone that can express your wishes. Of course, these documents are legal, have to be done in a certain way. Healthcare directors have to be witnessed. Powers of attorney have to be notarized at [00:08:00] least.
Washington Law mandates specific formalities and powers of attorney and healthcare directives to ensure that they’re legally enforceable. They have to be notarized. Sometimes they need witnesses, healthcare ones need witnesses, and they can’t have ambiguous terms. Okay, so ambiguous terms lead to legal challenges.
So in order to make it an effective document, it needs to be precisely and detailed in its drafting. Okay. When you’re setting up a durable power of attorney or an agent’s relationship at all, you wanna make sure you choose trusted agents, trusted people that will act on your behalf in your best interest.
Selecting reliable individuals as agents ensures that your financial or medical decisions align with your wishes. You wanna be able to trust these people and they need to be confident and competent. You wanna choose someone that’s responsible, someone’s organized, and someone that can make complex decisions without shrinking, right?
These people have to be able to step up to the plate [00:09:00] for you in emergencies, drop everything and step up, right? You don’t want someone that’s gonna hem and haw. You don’t want someone that can’t be there. You want someone that can be there and can make decisions, right? And when you’re setting up these documents and appointing these agents.
Make sure you’re open with these people that you’re appointing. If it’s your kid or your friend, or your brother or your spouse, discuss what your expectations are to make sure that they’re willing to do this, and that they understand what you want. And don’t just rely on the first person, right? Every document that we do in my office, unless it’s a very odd situation, is almost always gonna have a backup agent.
Like if something happens to your primary person that you’re appointing under a power of attorney. If that person can’t do it, your power of attorney’s dead. Right? It’s done. So you want to have a backup just in case that primary is unavailable or unwilling, right? They don’t have to do it. It’s a voluntary thing.
Okay? Long-term care planning. [00:10:00] Planning for long-term care incapacity should address potential long-term care needs, like Medicaid eligibility, right? And with Medicaid, that’s a topic for another podcast. But in order to qualify for Medicaid, you can’t have any assets. So there’s some asset protection planning involved in there.
Incapacity planning and asset protection planning for Medicaid can go hand in hand ‘ cause if you strategically plan, you can preserve assets while qualifying for Medicaid coverage. The other thing you want to deal with as far as incapacity planning with long-term care. Is outlining your preferences for, okay, if I’m in an assisted type of situation, do I want to have in-home care?
Do I want to be in an assisted living place, or do I want to be in a nursing home? Like those are all different, right? And sometimes you don’t get to choose. Sometimes you take what you can get, but if you plan, oftentimes you can pick the place you want to go and give your children or whoever’s managing your care options, which is [00:11:00] important.
Another thing that can be helpful for incapacity planning is a revocable living trust. Now, a revocable living trust is a will substitute. Typically, it’s typically a document that will avoid probate when you die, whereas a will doesn’t avoid probate. But a revocable trust can also manage your assets during your lifetime, particularly if you are incapacitated.
And it avoids things like guardianships and conservatorships. The trust allows a successor trustee that you name and you pick to manage your assets without any court supervision, without going to court at all. And unlike a guardianship, it’s private. Trust keep your financial matters private. It’s not gonna be all over the court websites for the nosy neighbor to come look at.
And the revocable trust can also be amended and revoked while you’re still competent. So if you decide to change your mind, you can make changes to it. Not a problem. Now another thing that goes within incapacity [00:12:00] planning is digital asset management. Like more and more today, all of our assets are available to be dealt with digitally, and there are also things like digital assets.
So you wanna make sure that your digital assets are managed as well. This includes like, being able to log into bank accounts, right? Logging into emails, opening someone’s phone, so the power of attorney can allow people that you appoint to manage your digital assets if authorized You. Also, people forget about this, but how many passwords do you have to right now?
Right. I’ve got a billion passwords. I don’t, I’ve got hundreds of passwords probably out there, right? If something happens to you, what happens if your power of attorney designee can’t get into your bank account or they can’t even open your computer right to check your email, or they can’t open your phone ’cause they don’t have the pin on your phone?
You wanna make sure you have passwords [00:13:00] documented in a place where they can access them to provide access and instructions for them to manage your on online accounts and other financial and non-financial digital assets. So you should include these passwords for social media, email, and specifically financial accounts to make this work, right?
As with all estate planning, we wanna make sure that we have regular updates. We wanna review and update these documents that, particularly with regard to our powers of attorney and stuff, to make sure that they reflect things that we want to have happen. You always wanna update your estate planning documents when major life events happen through marriage, divorce, health changes, family changes.
You also want to make sure that your estate planning and in incapacity documents like durable powers of attorney are up to date. The state of Washington’s changed their attorney power of attorney law over the years from time to time. So you wanna make sure that the document you have is still good.
Also, durable powers of attorney, [00:14:00] as a rule of thumb, is better to have a fresh one than an old one. Particularly with banks and places like that, that have a lot of lawyers looking at stuff. Because the newer, the better, the older ones wonder if there’s other ones that have taken its place, even though technically it’s still in place.
They are more reluctant to use them. So making it fresh is good. Revisit your plan every three to five years at a minimum, I’d say, just to make sure it’s accurate and still effective. And another reason why we do incapacity planning is like the first story we talked about, Carol. We wanna avoid guardianships.
A comprehensive incapacity plan prevents costly public guardianship cases or conservatorships too. Guardianship regards the person, like healthcare decisions and everything like that, conservatorship talks about financial assets and you wanna make sure that you have those documents in place.
Guardianships are expensive, they’re public and there’s courts involved. There’s third party guardian ad litem or court visitors [00:15:00] involved who look over everything and the court basically has control. They look into everything you do. You have to report every year or three, and it’s kind of a fiasco.
Making sure your plan is in place prevents all that. Okay? So don’t do a guardianship, like don’t have your parents show up and hey, I need to do something, but their brains don’t work anymore. Like, let’s think about this, right? If you are someone that needs to have your estate done, if you don’t have a power of attorney, you don’t have wills, trusts do yours.
If your parents don’t do theirs, right, it’s just you gotta do it. You gotta do it sooner than later, right? It’s never too late until it’s too late. And more often than not, the calls that we get here, it’s already too late. And so. If you’re turning into guard, guardianships like carol’s, and sometimes it doesn’t go well, you want to be more like John and Margaret, right?
Where you have everything in order and it’s just, [00:16:00] it’s not easy, right? It’s not easy to deal with someone else’s affairs, dealing with medical and emergencies and all this stuff, but it’s so much easier to be able to say, Hey, if this puts me in charge, listen to me. I can make these decisions my husband or.
Father or mother or brother or whatever friend gave me the ability to make these decisions by this legal document that has to be, you know, abided by. So that’s my 2 cents. That’s, that’s what I think. So, okay, so that’s, that’s it for today’s episode. Next week we’re going to talk about 10 reasons not to wait to do your estate plan, one of which is incapacity, right.
So come back next week, 10 reasons not to wait to do your estate plan. I’d like to thank you for listening to today’s episode of Legacy Talk. If you like today’s episode and would like to learn more, please like and subscribe for more great content. I’ve been your host, James Jones, to your legacy.
Thank you for listening to the Legacy [00:17:00] Talk podcast by attorney James A. Jones. If you found today’s episode helpful, we ask that you like and follow us on all major platforms so you don’t miss out on the latest episode. If you have questions for Attorney Jones, reach out at info@joneslegacylaw.com or visit our website at jones legacy law com.
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