When Frank started his company five years ago, he did what most passionate sole proprietors do and dove in headfirst. He was determined to build something special brick by brick, and, thanks to a sound strategy and lots of elbow grease, he succeeded. There was just one problem. Not once during all those late nights of dreaming big picture did Frank put a plan in place to protect his financial and property matters if he was ever injured or incapacitated.
What would happen if he did not die, but was instead out of it for any length of time? Who would sign checks and manage his accounts? Who would open his mail? Who could pay bills? Frank did not have answers to these questions. And he regretted it when he woke up one day and realized he had been in a coma for three months after being in a car wreck.
The reality is that most of the clients we work with are in the same boat. While we all know we will die someday and are constantly reminded that we need to protect our loved ones, it is not as certain that we will become incapacitated. Therefore, we find it increasingly difficult to plan for that possibility.
Most of us cannot imagine becoming incapacitated. And we take for granted that it will not.
In my book, Who Gets Your Stuff When You Die: 14 Secrets For Protecting Everyone You Love And Everything You Own, I explain that flexibility in estate planning means going beyond thinking about how to protect our families if we pass away. We must also consider what we have in place if we are incapacitated and cannot act for ourselves.
Guardianship – It covers more than you think
When most people hear the term guardianship, they immediately think of protecting children. But it is so much more than that. Take Frank, for example. To keep his business running while he was incapacitated, we had to get guardianship over him. But no one was able to sign checks for the business for over a month until the court appointed one of the brothers as his guardian. Luckily, that was a wise decision, but most of us would rather make that choice ahead of time.
Below are a few tools to help you make that decision:
A Living Trust – Trusts will serve you well if such a need arises. If you are a business owner, you could put the ownership of the business into the trust. The trust would be in charge of running the business, and you could name a successor trustee to make important decisions if you become incapacitated.
Power of Attorney – POAs can also be used to protect assets and handle business affairs in the event you are incapacitated. However, it is important to note here that Texas law requiring acceptance of a statutory power of attorney has eleven exceptions to that requirement. For instance, a title company can refuse to accept the POA if the person signing the POA is not an existing customer. Even courts and companies that accept them say that for someone to act under a power of attorney, the power to do what they are trying to do must be specifically listed.
We will get into other problems with POAs in a subsequent blog. The main takeaway here is that having a will or power of attorney is likely not sufficient to cover all of your bases in the event you are incapacitated. Consulting with a qualified estate planner about your specific situation can ensure these documents are designed to help you.
Flexibility in estate planning is important. Accidents or illnesses can take away our ability to act responsibly and handle personal or business decisions. And this can happen to anyone at any age. Please call Leigh Hilton PLLC so that we can help ensure your family will be taken care of in the best way possible. Leigh Hilton PLLC wants to be your first call every time for any estate planning need. We look forward to serving you.