Estate Planning: What You Need to Know, Part 2

Estate Planning, Schlau|Rogers, Your Smarter Estate Plan, Orange County Estate Planning Attorney Lawyer, Incapacity, Advance Healthcare Directive, Power of Attorney

Incapacity Planning is Super Interesting...Said No One Ever

However, it's vital to finding a balance between control and protection in your estate plan. In this second blog post of our five-part series, we dive into making some important decisions ahead of time to help those in decision-making positions during incapacity avoid a mess.

Key Takeaways

  • The first step in finding a balance between control in protection is planning for incapacity
  • An Advance Healthcare Directive guides your personal representatives through medical decisions
  • A Power of Attorney ensures the lights stay on and mortgage gets paid
  • Planning for incapacity means your family doesn't have to make tough decisions in a difficult time

If you read our previous blog post, Estate Planning: What You Need to Know, Part 1, then you know our overarching theme in this five-part series is finding a balance between control and protection. What we're aiming for is the right amount of protection from various people and organizations, and the right amount of control so we can ensure our decisions are honored. The first way we can address balancing control and protection is through incapacity planning. While that balance may be a moving target in other instances of estate planning, finding it in our incapacity planning is a little easier as long as we keep in mind some fundamental principles. In doing so, we can plan ahead to ensure tough decisions are made and a set of guidelines are put in place for personal representatives and family members in the event of incapacity.


As a foundation to any incapacity planning, we want to make sure that we provide a clear and unambiguous definition of incapacity in our estate plan documents that triggers application of the provisions in your estate plan governing what happens during incapacity. How you define incapacity is up to you, and the way it is ultimately defined is usually a combination of personal preference and a legal recommendation that will allow for smooth decision making when it is needed most. 

Estate Planning, Schlau|Rogers, Your Smarter Estate Plan, Orange County Estate Planning Attorney Lawyer, Incapacity, Advance Healthcare Directive, Power of Attorney

Incapacity can be defined with the definition of Incapacity in the trust agreement, a Disability Panel, two Licensed Physicians, the Attending Physician or the Spouse and the Attending Physician. You can also provide back-up guidelines in the event that you choose to have both your Spouse and the Attending Physician make the determination and your Spouse cannot do so. These back-up provisions would consist of the Attending Physician acting alone, a Licensed Physician replacing you Spouse, or a Disability Panel replacing your spouse.

In any event an independent Licensed Physician is required to step in, this would mean a physician that is not related to the Attending Physician by blood or marriage and is not employed by or a principal of the Attending Physician's employer. Physicians who are merely affiliated with the same hospital or other medical care facility may still qualify as independent physicians.


Once we have a clear and consistent definition to guide those in decision-making positions, we can address the specific handling of medical and financial issues during a time of incapacity...
— The Schlau Rogers Team


While there are numerous variables that could affect the way incapacity is defined in your estate plan, the important takeaway is this: we need a clear definition that will allow those in decision-making positions to determine whether you have become incapacitated or otherwise unable to make decisions for yourself. This will allow application of the provisions in your estate plan governing what happens during incapacity.

The definition must also be consistent and unchanging throughout your estate plan. In reviewing estate plans prepared by other attorneys, we often find that our client's documents have one definition in a Revocable Living Trust, and another definition in an Advance Healthcare Directive. This could be, at worst, disastrous to the administration of the the trust during incapacity, and at best, an unnecessary roadblock to decision making in a time of urgency.

Once we have a clear and consistent definition to guide those in decision making positions, we can address the specific handling of medical and financial issues during a time of incapacity to ensure your choices are honored, the lights are kept on and the mortgage is paid, and your loved ones can be at ease in during a trying time.


An Advance Healthcare Directive is a document that appoints someone else (a Healthcare Agent) to make healthcare decisions on your behalf in the event of your incapacity. This document essentially guides your personal representatives through medical decisions during a time of great need and vulnerability. Executing this document in advance allows you to control every detail of your care even when you are not able to make decisions for yourself - you can even defer to professionals in certain situations if you'd like to avoid making an advance decision.

A typical Directive will contain Health and Personal Powers, as well as Legal and Administrative Powers and Provisions. Health and Personal Powers include instructions concerning medical evaluations and treatment, long-term or hospice care, keeping you in your residence if possible, medical information and medical records, employing and discharging health care personnel, pain relief, and a Living Will, which would address end-of-life decisions like Do Not Resuscitate issues and burial instructions. Legal and Administrative Powers and Provisions include addressing the Health Insurance Portability and Accountability Act (HIPAA), appointing a Conservator, releasing the Healthcare Agent of personal liability, and interstate enforceability of the instrument, among other legal and administrative issues.

So what does this mean for you in finding that balance between control and protection? If you have a comprehensive Directive that includes the above considerations, and a few other corollaries, you will ensure that your healthcare decisions are honored at a time when you are unable to control the decision-making process. Creating this clear set of guidelines for health decision-making is essential to maintaining control and avoiding unnecessary third-party intrusion in very personal affairs.

One thing to keep in mind when creating this document is to avoid making a healthcare powers "springing" or only effective upon a formal incapacity determination. This could unintentionally lead to third-party intrusion in the event of a life-threatening and therefore quite dire situation, and a slow incapacity determination. The Directive, and other ancillary documents for that matter should clearly explain a formal adjudication of incapacity is not required for a Healthcare Agent to exercise the authority granted under the Directive. This will avoid a potentially slow incapacity determination that will result in a very costly, and possibly deadly, loss of time.

Another specific takeaway for unmarried partners is this: failing to execute an Advance Healthcare Directive could be disastrous. In this situation, the partner who has not been legally appointed as Healthcare Agent could be frozen out of making healthcare decisions even if the other partner would never have chosen anyone else to make those decisions. Just to make matters worse, the frozen-out partner may even be prohibited from seeing a patient partner during a time of incapacity at the most vulnerable of times. For these reasons, it's imperative that unmarried partners execute Advance Healthcare Directives to maintain control.


A Power of Attorney is a document that enables an individual or team of individuals to act as your agent. Having a Power of Attorney is vital to striking a balance between control and protection during incapacity. The scope of powers enumerated in this document can be very limited or quite broad depending on your personal preference.

If you'd like your agent to be able to act to the same extent you would have been able to if you were present and able to make decisions, you'll want to enumerate broad powers in the document. Example language would be the agent has "all the legal powers that I have, including, but not limited to..." These powers could include powers to fund, sell and buy, powers to manage real property and operate businesses, powers to collect and settle obligations, as well as power regarding bank accounts, insurance, lending and borrowing, among other specific powers.

On the other hand, if you'd like your agent to have very limited powers during your incapacity, you can specifically delineate very particular powers. For instance, your document could say, "only pay my utility bills." One reason you may want to limit powers granted to an agent could be you have other professional advisors that will address specific issues during your incapacity. If this is the case, just make sure everyone is on the same page and know, with more cooks in the kitchen, the chances of issues arising increases.

What really should be at the forefront of your mind when creating a Power of Attorney should be the reason you have the document in the first place: to maintain the status quo during your incapacity. If you have a family, or a complicated estate, it's even more important to maintain a sense of order so the lights at home are kept on, the mortgage is paid and the kids can keep going to school. Limiting powers too much can sometimes cause unnecessary delays and headaches. The key is to find the right balance for you.

Another thing to keep in mind, is you'll want to ensure that the powers provided to the agent do not terminate in the event of your subsequent disability or incapacity. You can do this by executing a Durable Power of Attorney.

Ultimately, finding a balance between how much control you want to grant your agent and how much protection you want to have over your estate during incapacity is an entirely personal and and individual decision. One way to ensure you are protected during incapacity is to use very specific language that leaves no room for interpretation in your Power of Attorney. But again, you'll have to work with your attorney to find the right balance between control and protection for you.


Finally, and perhaps most importantly, planning for incapacity ahead of time will allow you to protect your family and keep them at ease during your most vulnerable moments. While no one wants to think about incapacity, it's important to understand planning for it means the a lot of the really tough decisions have already been made. In the most difficult times, this can mean all the difference to your family and loved ones.

If you'd like, we can make sure your incapacity planning is individually-tailored to your personal preferences and situation so your family is kept at ease. Schedule your strategy session today and ensure you find a balance between control and protection with a comprehensive Advance Healthcare Directive and Power of Attorney. Just another way to make your estate plan smarter.

Matthew Schlau is a co-founding principal of Schlau|Rogers and an estate and business planning lawyer practicing in Orange, San Diego, Los Angeles and Riverside counties. He is a husband, father, blogger, crossfitter, and really good at helping people achieve their goals.

At Schlau|Rogers, we do more than just estate and business planning, probate and trust administration. Our objective is to provide individually-tailored plans that allow you the opportunity to reach your goals, all while minimizing headaches and risk, and maximizing peace of mind.

On our blog, you'll find useful information about estate and business planning, probate and trust administration, as well as some tidbits on personal finance, taxes, and anything else we think will help minimize headaches, worry and risk, all while maximizing peace of mind.

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