Mental incapacity and death planning
Estate planning is a two-sided coin.
The side everyone thinks about is asset transfer planning after death. However, the other side of the coin is hugely important because it impacts you, your spouse and your children during your life. What is it?
We each have a big need for mental incapacity planning. We are only talking about “mental incapacity” just to the extent that something happens and you can’t effectively handle your personal finances and investment decisions anymore. There are many causes that occur unexpectedly and quickly such as a car accident, a fall shoveling snow, or a stroke. Other causes occur over time, such as beginning dementia or other health related events.
Definitions of mental incapacity
Colorado statute (§15-14-102(5), C.R.S.):
An “incapacitated person” means an individual other than a minor, who is unable to effectively receive or evaluate information or both or make or communicate decisions to such an extent that the individual lacks the ability to satisfy essential requirements for physical health, safety, or self-care, even with appropriate and reasonably available technological assistance.
Some revocable living trusts define mental incapacity as follows:
An individual is considered to be incapacitated whenever two licensed physicians give the opinion that the individual is unable to effectively manage his or her property or financial affairs, whether as a result of age; illness; use of prescription medications, drugs, or other substances; or any other cause.
A true story: Stroke can happen unexpectedly to anyone
26-year-old Nicole woke up on Nov. 29, 2014, thinking about a fun day of holiday shopping she had planned. But after about a half hour of lounging around, a strange sensation suddenly came over her. “It was almost like feeling drunk,” she said, adding that she also began drooling. She reached for a glass of water, but her dominant left hand wouldn’t move. Using her right hand, she took a swig, only have it dribble down her chin.
Confused, Nicole made her way to the bathroom, her legs feeling oddly heavy. Looking in the mirror, she saw the left side of her face was drooping. Although she was experiencing all the classic symptoms of stroke, Nicole didn’t realize it. “I was 26 and healthy and active. There was no way I could be having a stroke,” said Nicole, who lives in Newport, Rhode Island.
Sometimes strokes are deadly, and other times they leave a victim with physical and communication limitations. They’re always frightening, whether they strike old or young. Stroke is still the #5 leading cause of death and the #1 leading cause of disability in the U.S. The vast majority of strokes are ischemic strokes, which occur when blood flow to the brain is blocked. Stroke is a disease that affects the arteries leading to and within the brain.
A stroke occurs when a blood vessel that carries oxygen and nutrients to the brain is either blocked by a clot or bursts (or ruptures). When that happens, part of the brain cannot get the blood (and oxygen) it needs, so it and brain cells die. About 10 percent of strokes, known as hemorrhagic strokes, are caused by leaking blood vessels. Nearly three-quarters of all strokes occur in people over the age of 65. The risk of having a stroke more than doubles each decade after the age of 55. Strokes can and do occur at ANY age. Nearly one-fourth of strokes occur in people under the age of 65.
Everyone is exposed to the possibility of a car accident that can cause brain damage. The terms mild traumatic brain injury (TBI) and concussion are interchangeable and can result from any type of trauma to the cranium. It has been estimated that about 3 million Americans with TBI seek medical attention annually. The most common causes of emergency room visits for TBI include falls (38%), blunt trauma to the head (20%), road traffic accidents (16%), and assaults (11%).
The best way to be prepared?
In order to be prepared, please make sure your estate plan covers both sides of the coin.
Our team can help you account for all aspects of estate planning, including cases involving mental incapacity. Contact Carlson Law Office, LLC to get started.