It’s always good to be able to give good news, even in the midst of a tragic event. I had been working with Gretchen for a good number of years, and she had a solid estate plan in place. She particularly was concerned that her beneficiaries have as much tax and other protections as possible even though they were very responsible people. But that’s not what we talked about earlier today.
Unfortunately, Gretchen’s youngest son Paul had been in a car accident and his air bad failed to deploy. This caused him to hit his head on the steering wheel and resulted in some brain damage. Gretchen’s main concern now was not about taxes or age restrictions for grandchildren, but making sure that Paul was receiving the care he needed. Paul was now no longer able to work, and it looked like he was going to have to go on Medicaid for his health insurance since he would not be able to afford to keep paying privately for health insurance. But in the midst of the medical crisis, reviewing Paul’s assets, and thinking about applying for disability benefits, Gretchen wanted to make sure that Paul’s legal paperwork was all set.
Since we had put together Paul’s legal documents, I knew that everything was in order. My administrative assistant had told Gretchen that everything was fine, but she really insisted on hearing it from me. After all, I was the attorney she had been working with for years. “Gretchen,” I said when I heard the worried ‘hello’ on the other end of the line. “First, Paul’s documents are fine, and you shouldn’t worry. So now, let’s talk about what we need to do next…”
Life is full of unexpected events. While no one intends to find themself in the midst of a tragic accident, it happens every day. If you have a family member or friend who has recently been in a serious accident, now is a natural time to think and review the estate plan to ensure the right legal documents are in place.
Is there an Estate Plan in Place?
Did the individual in question have an estate plan in place? If so, have any provisions been enacted by the accident?
Estate plans aren’t confined to what happens upon death. Estate plans, especially those using a revocable living trust, may also include provisions for managing finances, assets, property and health care in the event of a serious accident or permanent disability. Provisions of the estate plan that can be triggered by something other than death include:
• Financial management delegation in the event of a disease or serious disability that prevents the individual from managing his or her own finances, which could result from something like a brain injury following a serious accident
• Health care instructions, such as an advance directive, living will, DNR or medical power of attorney, that give family members the ability to act or specific instructions in the event of certain types of injuries or medical conditions
• Insurance policies that include provisions triggered by serious or permanent disabilities
Additionally, after a serious accident that involves disability of some sort, the individual may be eligible for government assistance programs depending on their assets and income. After an accident, it’s important to determine whether any provisions of the estate plan have been triggered and explore those eligibility factors for disability programs.
Is the Individual Mentally Competent?
If there isn’t an estate plan in place, but the individual is mentally competent, now is the time to enact one. As soon as possible! This is particularly true if the injury is serious and the individual is on the brink of death. Move quickly, and work with an experienced estate planning attorney who can advise you what’s possible and what the potential consequences could be in planning for an estate for an individual who is seriously injured. While it is preferable to take the time to fully understand all of the different options and opportunities in estate planning, a good estate planning attorney can guide you quickly through the process when time is short.
Unfortunately, if the individual is no longer mentally competent, and there isn’t an estate plan in place, families may be much more limited in the estate planning they’re able to do.
The test for mental competency varies depending on the state’s laws and the action that you want the individual to take. In North Carolina, for example, the capacity to execute a will or power of attorney is somewhat lower than the capacity to enter into a major contract. This means that a person may be mentally competent to execute a will, but not mentally competent enough to sign a contract to purchase a house. This means that an individual could sign a document distributing assets upon his death or grant power of attorney to someone who could purchase a house with their funds, but not actually buy a house on their own.
If mental competency is a problem, many families turn to guardianship proceedings. This is a process of having the individual declared legally incompetent, and having the court appoint a guardian to handle his affairs. When the guardian is appointed, he or she has the legal authority to assume responsibility for everything from day-to-day financial decisions to important estate planning strategies. Unfortunately, this means the guardian will have to file a lot of paperwork with the court.
If families choose not to pursue guardianship, but the individual is not mentally competent at the time of signing legal documents such as wills or powers of attorney, other family members could challenge these documents in court. It’s important to go the legal route to ensure that any action you take on behalf of family members is legally sound and avoid lengthy court battles with family members who may be unhappy with the outcome.
Make Sure Your Own Estate Plan is in Place
All of these issues and legal uncertainties can be avoided with a thorough estate planning. It’s unfortunate when a friend or family member is seriously injured, but it’s also a good reminder to revisit our own estate plans and make sure our own affairs are in order. It’s impossible to predict what might happen tomorrow, or even sitting down to dinner tonight. Take this opportunity to review your estate plan and work with a good estate planning attorney to ensure you have the right plan in place.