INCAPACITY PLANNING IN
NORTH CAROLINA Understanding What Incapacity Is, How You Can Develop An Incapacity Plan, and Why Doing So Is Important Is Something that Everyone Who Creates an Estate Plan Needs to Do
CHERYL K. DAVID North Carolina Estate Planning and Elder Law Attorney
The idea of incapacity is an essential concept in every estate plan. When you create an incapacity plan in the state of North Carolina, you will create several different tools that hinge upon the idea that you might one day lose your capacity. Understanding what incapacity is, how you can develop an incapacity plan, and why doing so is important is something that everyone who creates an estate plan needs to do. In our first white paper on incapacity planning, we are going to take a look at some fundamental issues surrounding the idea of incapacity.
LEGAL CAPACITY The idea of legal capacity is one that all of us know intrinsically, even though we rarely think about it explicitly. What right do you have to enter into a contract or agreement with someone else? What right do you have to choose the kind of car you want to buy, or where you want to live? What gives you the legal ability to manage your property and decide to buy and sell things? The answers to all of these question hinge on the concept of capacity. Legal capacity is the ability to enter into agreements and make decisions for yourself. The law presumes that each adult have capacity unless proven otherwise. In other words, as long as you are capable person, you have the
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capacity to make the kinds of choices that you normally would on a day-today basis.nt differences.
INCAPACITY When we talk about incapacity, we are talking about someone who does not have the legal authority to make certain types of decisions. Whether because of age, infirmity, or other reasons, a legally incapacitated person cannot, for example, enter into contracts or make the decisions that you and I normally take for granted. For example, let’s say that you have a young child. As a parent, you have the legal right to make decisions on that child’s behalf. The child is considered legally incapacitated. However, as that child ages and reaches adulthood, the child’s status as an incapacitated person disappears. That child becomes a capable adult who is able to make decisions on his or her own just as you and I can. Contrast the example of a child who gains capacity with the example of an adult who loses capacity. Let’s say that as your child reaches adulthood, your elderly parents discover that they have been diagnosed with Alzheimer’s disease. As time goes by they lose their ability to make choices,
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and one day become legally incapacitated. This means that they can no longer make decisions on their own and need someone, as your child did, to step in to make decisions on their behalf. (On a side note, you might come across the term “incompetence.� An incompetent person is the same as incapacitated person. Though the two terms are largely synonymous, incapacity is more commonly used today, though incompetency means the same thing.)
INCAPACITY PLANNING You have the ability to make choices. Unless a court has determined otherwise, you maintain this ability right now. The only way you might lose your ability to make choices is if something happens to you. If you were in a car accident tomorrow and rendered unconscious, you would lose your capacity. Incapacity planning, therefore, is what people can do in order to prepare for the possibility that they might one day lose their legal capacity. Incapacity planning is all about considering what might happen to you the future, and then making decisions about what you would want to happen to yourself, your property, and your family.
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For example, let’s say you are a happy, healthy adult. You’re married, have two children, and have no health problems. The idea that you might one day lose your ability to make choices is something that you have probably rarely considered. Nevertheless, it’s absolutely necessary for people like you to have an incapacity plan in place. If you don’t have a plan in place, and have not developed the proper tools, there could be a number of adverse consequences that will arise should you one day becoming capacity. On the other hand, an incapacity plan will allow you, and your family, to be prepared for this possibility.
PLANNING TOOLS An incapacity plan relies on various tools to protect your choices. What do you want to happen if you were to fall into a coma? What kind of care would you want to receive from your doctors? Who would you want to care for your children? Who would you want to take control of your financial responsibilities? Incapacity plans will require you to answer these questions in a manner that will be recognized under the law. You can’t simply blurt out your desires and expect them to be followed. You have to develop specific tools that
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courts will recognize and enforce. (We’ll talk more about the specific tools in our next paper on incapacity planning.)
DEVELOPING A PLAN No one is ever obligated to create an incapacity plan. You are totally free to go about your life without thinking about the future, developing legal tools that address future possibilities, or doing anything else that an incapacity plan will require you to do. But if you have wondered what might happen to you or your family should you become involved in a car accident or suffer from a serious illness, you need to begin incapacity planning immediately. A good incapacity plan might be something that you never actually have to use. There is no guarantee that you will one day become incapacitated. In the best of circumstances, you will never have to face the possibility. However, should the worst happen, you will need an incapacity plan in place to provide you the protections that you would otherwise not have.
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ABOUT THE AUTHOR
Cheryl David is a graduate of UNC-Chapel Hill, the University of Baltimore School of Law, and the prestigious Trial Lawyer’s College presided over by Gerry Spence. A former Administrative Judge, Cheryl is certified as an Estate Planning Law Specialist by the ABA accredited Estate Law Specialists Board, Inc. She is also a member of the American Academy of Estate Planning Attorneys, Medicaid Practice Systems and the National Academy of Elder Law Attorneys. In 2008, Cheryl received the honor of becoming a Fellow with the American Academy of Estate Planning Attorneys. The Fellow program recognizes Academy Members who demonstrate advanced expertise and significant practical experience in the total estate planning, trust, tax planning, guardianship, probate and estate administration fields. In order to maintain this advanced expertise, Cheryl takes over 36 hours of continuing education in Estate Planning, Elder Law, and Taxation each year. Also a Financial Planner, she holds the Series 7 and 66 Investment Licenses in addition to both Insurance and Long Term Care/Medicare designations. Her professional capabilities, together with over 25 years in practice, have combined to bring positive change to the lives of over 4500 clients and their families. 528 College Road Greensboro, NC 27410 Phone: (336) 547-9999 Fax: (336) 547-9477 WWW.CHERYLDAVID.COM
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