New York state trusts and estates law provides several legal vehicles that allow you to state your wishes concerning what should be done in case you someday become incapacitated. The most popular of these vehicles include the revocable living trust, the living will, various types of power of attorney, and the Health Care Proxy.
You are considered incapacitated when you become mentally incompetent (due to dementia, etc.) or unable to communicate your wishes. A hearing must be held before you can be declared legally incapacitated, however. Under such circumstances, you might be unable to manage your financial affairs or give informed consent to medical treatment. The following is a description of some estate planning devices that could help you mitigate these risks.
The Revocable Living Trust
A revocable living trust allows you to place your assets into a trust and still retain the right to change the terms of the trust or even end the trust during your lifetime. Once you die, the trust becomes irrevocable. A living trust allows you to avoid probate altogether. Whatever arrangement was established by the trust document continues uninterrupted after you die, and the assets within your trust are not subject to the jurisdiction of probate court.
What does this mean with respect to your possible incapacitation? Once you become incapacitated, your trust becomes an irrevocable living trust managed by whoever you named to succeed you as trustee (even a trust company). Your successor trustee must administer the trust under the terms you established in the trust document that you created before you became incapacitated.
Without a living trust, a court might have to appoint a conservator to manage your assets. Under a living trust, however, there is only one possible conservator – your successor trustee, who you named in advance. Placing your assets into a living trust that becomes irrevocable once you become incapacitated can also allow you to retain eligibility for certain government benefits, such as long-term care in a nursing home, provided that the trust document is properly drafted.
The Living Will
A standard will allocates your property and provides certain other instructions (such as naming a guardian for your minor children) concerning what should be done after you die. Since a standard will is not even opened until after you die, it cannot help you before you die – except to give you peace of mind. A living will, by contrast, is designed to assist you with matters that may come up due to incapacity.
In a living will, you state your wishes on how your healthcare should be managed after you become incapacitated. You might, for example, leave instructions on the withholding of life-sustaining medical care that is likely to prolong the dying process.
These instructions are typically (but not always) meant to apply only when you are terminally ill, in a persistent vegetative state, or conscious but with irreversible brain damage that will prevent you from ever regaining capacity. A living will is sometimes called an Advance Directive for Health Care or a Health Care Declaration.
The Power of Attorney
A power of attorney is a document that gives one person, known as the agent, certain legal authority with respect to the person who delegates that authority, known as the principal.
General Power of Attorney vs. Limited Power of Attorney
A general power of attorney delegates very broad authority to make decisions regarding the principal’s finances. It might grant the agent, for example, the authority to perform any act that the principal could perform if physically present and mentally competent.
On the other hand, the power of attorney’s grant of authority might be very narrow. It might limit its grant of authority to allowing the agent the right to represent the principal at a particular real estate closing, for example. Finally, its grant of authority might fall somewhere between these two extremes (as most do). It might include the authority to buy and sell real estate, invest money, open financial accounts, sell stocks, file lawsuits, or pay bills.
Durable, Nondurable, and Springing Powers of Attorney
New York law recognizes durable, nondurable, and springing powers of attorney as described below:
- A durable power of attorney becomes effective when it is signed or upon the date that it states it will become effective. It remains effective before and after you become incapacitated unless you regain capacity and terminate it. Since it remains effective even if you lapse into a coma, it can avoid the need for a court to appoint a conservator to manage your assets.
- A nondurable power of attorney automatically terminates if you lose capacity. It is useful if you wish to empower someone to, say, sign a contract when you cannot be physically present because of your medical condition.
- A springing power of attorney becomes effective only after you are declared incapacitated, and it ends as soon as you regain capacity. It is useful if you prefer to manage your own finances while you are still able to, but wish to empower a specific person to do so if you lose capacity.
The Health Care Proxy
A Health Care Proxy can be used as an alternative to a living will or as a supplement to it. Whereas in a living will you specify your wishes concerning your health care in the event that you become incapacitated, a health care proxy allows you to empower a specific person to make health care decisions on your behalf should you become incapacitated. This document can be drafted to apply to all medical decisions, or it can be limited to certain medical decisions (decisions you have not already made in your living will, for example).
Consult with a New York Trusts and Estates Legal Team Today
If you wish to prepare for the possibility of incapacity later on in your life, your best bet would be to seek out the services of a seasoned New York trusts and estates legal team. The Law Office of Andrew M. Lamkin, P.C., can help you take full advantage of the nuances of New York law to create an estate plan that is tailor-made for your needs and priorities. Schedule a free consultation by calling (516) 605-0625 or simply contact us online with your concerns.