Planning for Disability or Incapacity

In addition to the health-care decision making issues discussed in the prior chapter, you should consider preparing a general Durable Power of Attorney for financial matters, so that someone can manage your property if you are incapacitated. For married couples, consider using the California Statutory Form Durable Power of Attorney, which is immediately effective. For unmarried persons, I recommend the use of a custom-drafted Springing Durable Power of Attorney, which becomes effective only after you are incapacitated.

In addition to the powers normally specified in a durable power of attorney, you might consider writing in authority for your “agent” to transfer your assets into a living trust (to avoid probate at your death), and to make small gifts (up to $12,000 per recipient per year) on your behalf to your relatives or others. The power of attorney may also include authority for your agent to make arrangements for your personal care, to store or sell your property, and even to arrange for the care of your pets.

In addition to the legal forms described above, you should carefully review your financial situation and consider purchasing insurance to protect your family in the event that you are disabled.

California’s state disability insurance (SDI) provides minimal benefits for only one year. In addition, you should make plans so that your health insurance won’t lapse when you most need it.

Nursing Home Costs and Long-Term Care Insurance: Finally, you should consider long-term care insurance, to cover the expenses of nursing-home coverage.

The California Department of Aging produces an excellent booklet on this subject, called “Taking Care of Tomorrow: A Consumer’s Guide to Long-Term Care. ” You can obtain a copy of the booklet from any insurance agent who sells long-term care insurance, or by calling the California Department of Insurance at 800-927-4357.

In 1994, California enacted a new form of long-term care insurance, called “Partnership” policies, which can shield assets from Medi-Cal liens. This insurance is described in the booklet mentioned above.