Estate planning requires the ability to understand what you are doing. However, due to age, injury or illness, at what point might you have too little understanding to make legal plans? That’s a tough call. What is incapacity for legal purposes, how do you define it, and how do you keep an accusation of incapacity from ruining your highest hopes for your loved ones? Much is at stake. The estate plans you make affect your life, the lives of your loved ones and, certainly, the management and disposition of your hard-earned assets. The topic of capacity or incapacity –being “of sound mind and body” – is indeed a difficult one. This issue was addressed in a recent article in the Journal of Financial Planning titled “Defining Incapacity in the Modern Estate Plan.” The article is based on California law, but if you are caring for an elderly loved one, the message is the same: defining legal capacity can be incredibly difficult. Much ink has been spilled by lawyers, judges, and family members over the years defining it, too. The biggest teaching point from the article (and my own experience with clients) is to “ink” your own estate plans sooner rather than later. You likely will never again be as sharp as you are today. Procrastination is the death bed of proper estate planning.
Reference: The Journal of Financial Planning (May 2012) “Defining Incapacity in the Modern Estate Plan”