You may lose the ability to manage your own affairs as you grow older. Therefore, it’s necessary to have an incapacity plan in place:

* A durable power of attorney can name a trusted friend, relative, or advisor to sign papers if you can’t make knowledgeable decisions.

* A living trust can designate a successor or co-trustee to manage assets in the trust, if you should become incompetent.

Such advance planning will help preserve family assets and provide for your own well-being, in case of incapacity. A prudent plan can help avoid the turmoil and publicity of a guardianship hearing, which might be required if nothing has been done.

Also, you probably should insure against the costs of ill health and incompetency. Be sure these coverages are adequate:

* health insurance, to pay medical bills;

* disability insurance, to provide an income if you’re unable to work; and

* long-term care insurance, to pay providers of custodial care, at home or in a specialized facility such as a nursing home.