Capacity required: establishing end-of-life legal documents

Less than half of Americans¹ have made provisions for how their money and estate should be handled after their death, and that percentage hasn’t changed much for more than 30 years. Whether Americans shy away from long-term planning because they don’t know where to start or because they don’t want to think about the inevitable end of life, the stakes have never been higher as people live longer and spend more years living in poor health². 

Planning ahead can help ensure that, when individuals are unable to make their own decisions, what they want to happen does, and what they don’t want to happen doesn’t. But waiting until physical and especially mental ability is compromised before starting estate planning may lead to unwanted results. And if no will is in place at the time of death, a local probate court then has to decide how to distribute the property of the deceased, without any indication of the individual’s wishes. 

For caregivers of a loved one with a disability, the following documents could take on additional importance—providing continuity of care. As with all legal planning, it’s important to work with a well-qualified attorney to put the proper legal structures in place.

The cornerstone of legal planning: capacity

The process of planning for end-of-life care and after death provisions requires that many of the elements be in place well before they are needed. Legal documentation needs to be understood and finalized while capacity still exists.

Having capacity means that a person must be able to understand the nature and effect of their actions. For this reason, capacity must be established before legal documents can be executed that will be key resources at the end of life.

Legal documents for when capacity no longer exists near end-of-life

To begin, below are legal documents that will ensure an individual’s wishes will be carried out while they are alive but unable to express their wishes:

Advance medical directives are a set of instructions that outline an individual’s health care wishes, providing instructions on treatments that they do or don’t want to receive, according to the American Bar Association. It is used when severe medical situations occur and the patient is not able to communicate their wishes. An advance directive may include terminal illness, but it may also cover medical events such as dementia, stroke or coma.

A living will is a specific type of advance directive that outlines an individual’s wishes for end-of-life care, if they become terminally ill and cannot make these decisions on their own, as described by LegalTemplates. Living wills can be used to specify whether life is to be prolonged, what measures are acceptable to keep the patient alive, and other instructions around things like pain management, organ donation, and religious preferences.

A health care proxy (or a durable health care power of attorney) is an advance directive that grants the authority to make medical decisions in case you are not able to make them due to incapacity.

A durable power of attorney for financial matters grants the authority to make financial decisions in case an individual is not able to make them due to incapacity. Understanding what rights the principal (the subject of the POA) and the agent (the person who receives the Authority) have is of key importance. A POA does not force the principal to give up their independence, nor can it be used to alter the principle’s estate planning.

Legal documents effective after death

A will is a legal document that captures wishes regarding what happens to property after an individual dies. A will can also be used to name who will be the successor guardian for minor children or a loved one with a disability, where applicable. A will generally covers any assets that do not have named beneficiaries and those assets not included in a trust. An executor who handles settling of the estate (probate) also is named in a will.

A trust is a legal arrangement that authorizes a third party (trustee) to hold and manage assets on behalf of a beneficiary. Trusts can come in many forms: some have tax benefits, while others limit a beneficiary’s access to the money or protect it from creditors. Primarily, trusts are a way to avoid the probate process and control specific assets after an individual has passed away. Specific types of special needs trusts also are available that are designed to preserve access to government benefits.

Supplemental document further details last wishes

A Letter of Intent is not a legal document that requires proof of capacity to execute; however, it can be a valuable complement to legal and estate documents. A letter of intent includes information about how to care for a loved one, future goals for their quality of life, and where to find important information. It can be a critical step to ensure continuity of care when the caregiver no longer is able to care for their loved one with a disability.

Because mental capacity must be present in order to execute the legal documents that can ensure end-of-life and after-death wishes are carried out, the sooner families start putting them into place the better.