The Bare Essentials

Planning for disability is just as important as estate planning and can help minimize family conflict, protect family members, and ensure security and access to financial assets during incapacity. Mental or physical disability can occur at any time, often unexpectedly, and may last for years. Failure to plan accordingly can trigger protracted court proceedings to appoint a guardian (at potentially significant costs), emotional distress for the family, and the sacrifice of individual privacy. For these reasons, individuals should consider having each of the following documents:

Financial Power of Attorney.

A general financial power of attorney appoints an attorney-in-fact to handle the individual’s financial and personal business matters (such as filing tax returns, paying bills and expenses, managing and selling assets, etc.) during the individual’s life. The power of attorney should be durable (DPOA), which means the power will remain in effect if the individual becomes incapacitated (but it will terminate upon the individual’s death). Other considerations include:


Springing Powers.

A DPOA can be drafted to “spring” into effect only if and when an individual becomes incapacitated.


Determining Incapacity. 

The DPOA should clearly state the procedures for determining if the individual is incapacitated (particularly important for springing DPOAs). For example, the DPOA may require the opinion of two doctors, one of whom is the individual’s regular, primary physician (if one exists).


Additional Powers. 

In addition to basic financial matters, a DPOA can authorize the agent, on the individual’s behalf, to engage in estate planning, make loans and gifts to family members and/or charities, change beneficiaries of retirement account and life insurance, etc.


Agent Selection. 

Individuals should carefully select the initial and successor agents under DPOAs. While financial institutions are generally unwilling to serve, not all family members and friends will have the requisite sophistication to manage an individual’s financial matters.


Health Care Power of Attorney (HCPOA).

A HCPOA appoints an agent to make medical decisions on an individual’s behalf if he or she is unable to do so. The HCPOA also can address the individual’s wishes with regard to organ donation, participation in medical studies or trials, etc. As with the DPOA, the HCPOA should clearly state the guidelines for determining if an individual is incapacitated. Also, the individual should select agents that will honor the individual’s wishes and are readily accessible, as they may be called on to interact daily with medical staff and others if the individual is severely incapacitated for a period of time.

Living Will. 

A living will specifies an individual’s wishes regarding end-of-life care and the provision or withholding of life-prolonging treatment. It may be incorporated into a HCPOA. To help avoid potential conflict and court actions, an individual’s living will should clearly state his or her wishes regarding the provision of extraordinary measures to continue or extend life in the event of a terminal illness or persistent vegetative state.

Nomination of Guardians. 

Forms that nominate a guardian of the individual and guardian (or conservator) of the individual’s estate can help avoid protracted or contested court proceedings if appointment of such guardians becomes legally necessary. If state law allows, these appointments may be incorporated into DPOAs and HCPOAs.

HIPAA Authorization. 

A HIPAA Authorization allows an individual’s medical care providers to disclose otherwise private (and federally-protected) medical information to the individual’s designated agents, family members, and other selected persons.

Notice to Agents. 

Individuals should consider providing copies of their powers of attorney and other authorization forms to the applicable parties (financial institutions, agents, doctors, etc.), so these documents are already on file in the event of incapacity.

Periodic Reviews. 

An individual’s wishes or family dynamics may change and/or agents may become unavailable. Accordingly, incapacity plans should be reviewed annually and updated, if needed.


Additional Information

Understanding Disability: Facts and Retirement Planning Considerations


By Rick Miller, PhD, CFP®, Founder of Sensible Financial, and Scott Haglund, FSA, MAAA FLMI, Vice President & Director of Actuarial Services at Life & Health Federated Life Insurance Company.

December 8, 2014

Disability & Asset Protection Planning


This article discusses the essential basic estate planning considerations and documents every senior citizen ought to have, and provides a concise overview of guardianship, nursing home, Medicaid, and asset protection planning in an easy to read format.

Disability Benefits (Social Security Administration)


Disability is something most people don’t like to think about. But the chances that you’ll become disabled probably are greater than you realize. This booklet provides basic information on Social Security disability benefits and isn’t meant to answer all questions. For specific information about your situation, you should speak with a Social Security representative.

We encourage the viewers of this information to contact us directly regarding the information

contained herein in order to receive consultation from legal counsel.  The information provided

is generalized and presented to educate but may not apply to specific concerns that require

legal counsel for additional assistance.