Your Money

Personal finance: Plan in event of incapacity

Certified financial plannerFebruary 3, 2013 

What would happen if you were mentally or physically unable to take care of yourself or your day-to-day affairs? You might not be able to make sound decisions about your health or finances and you could lose the ability to conduct your affairs. Unless you’re prepared, incapacity could devastate your family, exhaust your savings and undermine your financial, tax and estate planning strategies. Planning ahead can ensure that your health-care wishes will be carried out and that your finances will continue to be competently managed.

There are three types of advanced medical directives: a living will, a durable power of attorney for health care (or health-care proxy) and a Do Not Resuscitate order (DNR). Each type has its own purpose, benefits and drawbacks, and may not be effective in some states. You may find that one, two or all three types of advanced medical directives are necessary to carry out all of your wishes for medical treatment.

A living will allows you to approve or decline certain types of medical care, even if you will die as a result of the choice. However, in most states, living wills take effect only under certain circumstances, such as terminal injury or illness. Generally, a living will can be used only to decline medical treatment that “serves only to postpone the moment of death.” Even if your state does not allow living wills, you may still want to have one to serve as an expression of your wishes.

A durable power of attorney for health care allows you to appoint a representative to make medical decisions for you if you cannot do so own your own. Lastly, a DNR is a doctor’s order that tells all other medical personnel not to perform CPR if you go into cardiac arrest.

Your expectations regarding future medical care needs and your personal attitude will help determine whether you should execute one or more advanced medical directives.

•  Do I have any strong feelings or wishes regarding my future medical treatment?

•  What is my attitude toward life-sustaining treatments, such as artificial respiration and intravenous feeding?

•  Are there circumstances under which I definitely would, or would not, want such treatment?

•  Is there someone I trust to make medical decisions on my behalf?

•  What are my wishes regarding day-to-day care or medication?

•  Do I want cardiopulmonary resuscitation (CPR) to be performed if my heart or breathing stops?

When putting together a plan for your medical care, this is also a great time to address the care of your financial matters. Without someone to handle your financial affairs when you can’t, your property could be wasted, abused or lost. To protect against these possibilities, consider putting in place a revocable living trust and a durable power of attorney.

A durable power of attorney allows you to authorize someone else to act on your behalf for financial matters. There are two types: non-springing, which is effective immediately; and springing, which is not effective until you have become incapacitated. Keep in mind that both types end at your death.

While a generalist attorney can prepare these documents, most consumers should seek an attorney that focuses on estate planning.

Life is a journey, plan for it.

Neil A. Brown is a CPA and CFP with Burkett Financial Services in West Columbia. Reach him at or (803) 200-2272.

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