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Estate Planning for Incapacity or Disability [6 Documents and Insurance Policies to Know]

Fact Checked by Jason Herring & Barry Brooksby
Licensed Agents & Life Insurance Experts.
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incapacity and disability estate planning

As people are living longer than ever, including documents and insurance that cover disability and incapacity are an important part of estate planning. In the following article we will cover the four documents and two types of insurance policies that everyone should be aware of and consider to protect their estate and legacy.

Preparing for Incapacity or Disability

It is a sad but undeniable fact that a number of causes can rob us, temporarily or permanently, of our ability to make decisions for ourselves. Strokes, heart attacks, accidents, and a number of other conditions can render us unable to communicate and participate in medical decisions.

Alzheimer’s, dementia, and a host of other causes can render us incapable of making financial as well as medical decisions. While each of us hopes we are not the one stuck with one of these conditions, the most responsible thing we can do for ourselves and our families is to prepare for the worst while praying for the best.

The best estate planning will entail many, if not all, of the following documents and may also incorporate the insurance policies mentioned below as well.

Four Documents and Two Insurance Policies to Consider

The following documents and insurance policies are often recommended when planning for incapacity or disability.

Living Trust

A revocable living trust allows you to name a trustee that will be able to step into your place in the event that you are incapacitated. A living trust avoids your loved ones from having to petition the court for a conservatorship. Instead, your named successor trustee will step in to take care of your estate when you are incapacitated thanks to your living trust.

Living Will

A Living Will is different than a typical Will. It is a directive to health care providers stating whether you would want certain extraordinary life extending services, like feeding tubes, if there were no reasonable likelihood of your recovery. Many people prefer to end their lives naturally rather than extend it in a vegetative state. It is far better to make this decision for yourself, rather than place the burden on your family.

Power of Attorney for Health Care

A Power of Attorney for Health Care Purposes gives to the person or persons designated the right to make certain health care decisions on your behalf if you are unable to make them for yourself. In this manner, there is only one person to whom your doctors will look for decision making, and the need to obtain a Court order for critical decisions is eliminated. You can also indicate on the form your preference as to several types of health care options to guide your decision maker.

Durable Power of Attorney

A Durable Power of Attorney gives the person you designate the authority to make financial decisions during any period of your incapacity. This permits vital decisions to be made over your financial affairs without the necessity, expense, and delay of obtaining a Court order. Financial decisions will not always await your recovery, and delay can be costly. This is a viable solution to a very real problem.

Disability Insurance

If you are under the age of 65, long-term disability insurance is another prudent choice. If you suffer from a qualifying disability the policy will pay out a income benefit for a specified benefit period after the required elimination period has passed.

Long-Term Care Insurance

If you are in need of long-term care services, long-term care insurance is a great option to help cover the costs and protect your assets. There are also long-term care insurance riders that provide similar benefits of traditional long-term care insurance but offer a fixed premium.

State Specific

Most states provide for each of these documents, and several provide forms for your use, although it is always best to consult with an attorney before executing any of these documents.

In addition, different insurance carriers will offer disability insurance or long-term care insurance. There are also specific companies to choose when considering a hybrid long-term care life insurance policy.

Consider Who You Choose to Act on Your Behalf

Care should be given to who you appoint s decision maker for any of these documents or insurance policies. While it may be tempting to name your spouse, ask yourself whether your spouse is really the best person to make these decisions.

Further, appointing your children may be a popular decision now, but invites discord later when the children cannot agree as to a course of action. It is better for you to make the decision now, and centralize the decision-making in the hands of the person in whom you reside the most confidence.

Keep the Documents Handy

Here is a practical, and important bit of advice. Do NOT stuff these documents in a safe or safety deposit box, where no one can have access to them in the evening and week-ends, when they are most likely to be needed. Have them executed in duplicate, and give the persons named in them copies.

Also give your health care providers copies for their files. I recently received a call from the wife of a client. While they were in their Florida home for the winter, her husband had a seizure and she had no idea where his Living Will, Durable Power of Attorney, or Power of Attorney for Health Care were stored.


None of us wants to think about what it would be like to be mentally incapacitated or permanently disabled. But it does happen, and it is far better for the ones we love if we have prepared prudently for such an event rather than impose this burden on them during what will be emotionally difficult times.

Eric S. Ratliff, JD, LLM
Ratliff Law Firm
740 Pollard Road
Kodak, TN 37764
(865)932-3441 x704

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