FEDweek

You May Need an Incapacity Plan

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.