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How To Create an Estate Plan for Those with Special Needs

Published on: Aug 16 2020

Estate planning typically focuses on healthy people and their families.

Many families, however, have one or more members with chronic illnesses or conditions.

That changes the estate planning equation.

The person with the illness or condition might be the estate owner or a loved one of the owner, especially a child.

In either case, the estate plan requires some adjustments and special considerations.

First, we will focus on the case of the estate owner who has the chronic condition or disease.

The initial task is to determine whether the disease is likely to lead to a cognitive or mental decline or the effects primarily are physical.

This is important, because when the effects primarily are physical the owner can retain control of decisions longer.

When the effects are cognitive, the estate planning documents need to be developed and signed sooner rather than later.

Otherwise, the documents are easier to challenge.

In addition, the powers of attorney become more urgent as are the selections of the decision makers or agents.

When documents are signed, have your physician write a letter affirming that you were competent at the time.

When the disease can affect handwriting, by making it shaky for example, some attorneys advise that you execute an affidavit that explains the changes in your signature.

You need a separate financial power of attorney and health care power of attorney.

These documents appoint people to make decisions in these areas when you are unable.

A key point is you probably want separate people for these tasks, because the person you want making medical decisions might not be competent to make financial decisions and vice versa.

You also should consider appointing two or more people under each document.

Some people believe a committee of trusted people will result in better consideration of all the factors and better decisions.

Another key point is the agents must be prepared to perform the tasks for a long time, since you are known to have a chronic condition.

For example, many POAs or living wills state flatly the person does not want special life extension care in case of a terminal illness.

But some terminal illnesses do not affect mental function.

You might prefer to receive treatment if you know you will be mentally alert.

You also might decide you want any experimental treatment that becomes available, or that you don’t.

The point is that knowing you have a specific condition means your medical care documents can be customized.

Even when you have existing documents that after a review seem to meet your needs, it is a good idea to re-execute or reaffirm them to forestall any arguments you did not consider the issues in light of your illness.

Financial accounts should be consolidated.

I advise this for everyone, but it seems especially important for someone with a chronic condition.

Consolidation simply makes life easier and reduces the potential for oversight and mistakes.

When periodic hospitalization or other treatments are likely, you might need to prepare a series of temporary limited powers of attorney.

You want someone to be able to pay bills and perform other necessary tasks when you are not able to while in the hospital or under treatment.

In next week’s issue of Retirement Watch Weekly, I’ll share more tips on estate planning for family members with special needs.

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