Laid-up planning

Incapacity Planning is part of Estate Planning

Most people think estate planning is about death.

They imagine a will. They think about who inherits what. They picture funerals and probate and avoiding taxes. That is all part of it, but it is not the whole picture.

Because a key question is this:

What happens if you don’t die…but can’t handle your affairs?

What if you are alive, but unable to lead? What if something happens to your mind, your memory, or your ability to make decisions?

If your plan does not account for that, then you do not have a complete estate plan. You have half a plan.

This is where incapacity planning comes in. And it is not just for the elderly. It is for anyone who owns property, runs a business, supports a family, or simply wants their life to stay stable when they cannot show up.

Let’s break it down.

What Incapacity Means

Incapacity does not always come with flashing lights. It might not be dramatic. It might not be permanent.

It can be the slow onset of dementia. It can be a stroke that robs your speech. It can be a brain injury from a car accident. It can be a severe bout of depression or psychosis. It can even be a reaction to anesthesia that leaves you confused and unable to give direction for days.

The legal system defines incapacity as the inability to manage your property or make informed decisions. But in practice, it just means the machine of your life grinds to a halt unless someone else can legally step in.

The Two Halves of Estate Planning

A complete estate plan should answer two questions:

1. What happens when I die?

2. What happens if I do not die, but I cannot act?

Most people build their plan around the first question. They create a will. Some establish a trust. They name beneficiaries and try to avoid probate.

But very few build around the second question. Which is strange, because most people are likely to experience a period of incapacity before they die.

If your plan does not address both, it is not complete.

The Legal Tools That Work While You Are Alive

Here are the tools that allow someone to manage your affairs during a period of incapacity. Some of them prevent court involvement. Others provide direction if court becomes necessary. Either way, this is what makes a plan functional in real life.

Successor Trustee

If you have a revocable living trust, you are likely serving as your own trustee. That works fine while you are alive and competent.

But if something happens, the trust should name a successor trustee. This person steps in immediately if you are incapacitated. They can manage any asset that is properly titled in the trust. That includes real estate, investment accounts, business interests, and personal property.

No court process. No legal delay. No frozen assets.

This is one of the clearest advantages of using a trust over a will. It gives continuity of control while you are still alive.

Property Power of Attorney

A Property Power of Attorney lets you name an agent to manage financial and property matters.

This would be for any property owned individually (not owned by your trust).

Depending on how it is drafted, it can include:

• Banking

• Bill payment

• Real estate transactions

• Tax filings

• Business operations

• Insurance claims

You can make it effective immediately, or only upon incapacity. Both have advantages. An immediate POA (“durable”) gives power to your POA right now, while a “springing” POA offers control only after you’re deemed incompetent. Springing POAs often require formal medical proof before they can be used, which can cause delay.

It is also important to know that some banks are reluctant to honor old or general POAs. Many institutions require their own forms or reject documents that are outdated. This is why POAs should be reviewed every few years.

Healthcare Power of Attorney

This document names someone to make medical decisions for you if you cannot make them yourself.

If you do not have one, doctors may look to the default state hierarchy for medical decision-makers. That might mean your spouse, your adult child, or your parents. But if there is conflict or uncertainty, the result may be confusion, delay, or a court petition for guardianship.

With a Healthcare POA, you control who has the authority to speak on your behalf. It is simple, clear, and essential.

Living Will

Also known as an Advanced Healthcare Directive, this document outlines your medical wishes in end-of-life situations. It addresses what kind of care you want if you are permanently unconscious or terminally ill.

It may include preferences about:

• Feeding tubes

• Ventilators

• Artificial hydration or nutrition

• Resuscitation

• Pain management

The goal is to provide guidance to your Healthcare POA. It tells them what matters to you, so they do not have to make impossible choices in a crisis.

Why POAs Are Not Always Enough

Even if you have signed a POA, it might not work when your family needs it. Common reasons include:

• The agent refuses to act

• The document is too narrow in scope

• The agent is unavailable or untrustworthy

• The bank will not accept the POA

• The family is in conflict about its use

This is why POAs should be regularly reviewed and discussed with your chosen agents. If the person you name is not willing, not ready, or not trusted by others, your plan can fall apart.

This is also why having backup nominations for guardianship or conservatorship is smart. It is not about expecting the worst. It is about reducing friction if things go sideways.

Guardianship Nomination

Sometimes, even with planning in place, court intervention becomes necessary. That’s where guardianship comes in.

A guardian is someone appointed by the court to make healthcare and personal decisions for a person who has lost capacity. This can include medical care, living arrangements, and general wellbeing.

Ideally, you never reach this point. A well-drafted Healthcare Power of Attorney should provide enough authority for your chosen agent to step in. But things don’t always go as planned. The POA might be outdated, too limited, contested, or outright rejected by a healthcare provider. In those cases, the only path forward may be a formal guardianship proceeding.

Becoming someone’s guardian is not simple. It often involves multiple medical evaluations, notice to family members, court hearings, and detailed paperwork. And if guardianship is granted, the responsibilities don’t stop there. Guardians are typically required to submit annual reports and may face ongoing court oversight.

However, there is one way to make this process less burdensome: nominate your preferred guardian in advance.

You can do this while you still have legal capacity, usually as part of your estate plan. It doesn’t give anyone power today, but it tells the court, “This is who I trust.” That nomination is not binding, but it carries real weight. Courts tend to follow it unless there is a compelling reason not to.

Planning ahead cannot eliminate the possibility of guardianship. But it can make the process faster, clearer, and less stressful for the people who love you.

Conservatorship Nomination

Conservatorship is the financial counterpart to guardianship. It comes into play when someone loses the ability to manage their property or financial affairs, and no valid Power of Attorney is in place; or the POA fails to function.

A conservator is appointed by the court to step in and take over. That can include paying bills, managing investments, handling income, filing taxes, and overseeing any assets not titled in a trust.

Like guardianship, this process is neither quick nor easy. It typically requires detailed medical documentation, court filings, service of notice to interested parties, and sometimes even contested hearings. If the conservatorship is granted, the conservator must follow strict reporting requirements, including annual accountings and possibly court approval for major financial decisions.

In short, conservatorship is a serious responsibility, and it comes with serious oversight.

But there is one smart move you can make now: nominate a conservator in advance.

Just like with guardianship, this nomination does not give anyone immediate authority. What it does is offer direction. If a court ever needs to get involved, it has a name in hand—the person you trusted most when you still had the capacity to decide. That alone can prevent conflict, speed up the process, and reduce the emotional toll on your family.

No one hopes to end up under conservatorship. But planning for the possibility is part of protecting your legacy. A good estate plan does not just try to avoid court. It prepares for what happens if court becomes necessary.

What Happens Without a Plan

When incapacity hits and there is no plan, things can get bad quickly.

A spouse cannot access the operation’s checking account. Bills goes unpaid. The IRS issues penalties. Vendors cut off supplies.

Adult children disagree about life support. The court gets involved. Relationships suffer.

Properties fall behind on taxes. Business deals stall. All while the person at the center of it is still alive but unable to act.

Contrast that with a plan where someone is named, prepared, and empowered. There is no scramble. No guesswork. Just continuity.

What a Real Plan Looks Like

You do not need dozens of documents. You need a few key ones that are well written, properly signed, and easy to access.

A complete incapacity plan includes:

• A revocable living trust with a named successor trustee (optional)

• A Property Power of Attorney

• A Healthcare Power of Attorney

• A Living Will or Advance Directive

• A guardian nomination

• A conservator nomination

All of these should be reviewed every few years and updated when major life events occur. Marriage, divorce, birth, business acquisition, or significant health changes are all good triggers.

Just as important, your trusted people need to know where these documents are and what their responsibilities will be. Surprises create delay. Transparency creates confidence.

The Bottom Line

Estate planning is not just about what happens when you die. Rather it ought to include what happens when you do not.

Staying in control of your life, even when you cannot physically or mentally act.

Protecting your family from chaos.

Preserving your business from collapse.

It’s helpful in avoiding confusion, conflict, and court.

The truth is, many people will face some period of incapacity before they die. If your plan only addresses death, it leaves your family exposed when they need guidance most.

Build your plan for the whole picture. Then make sure the right people know how to use it.

Because legacy is not just what you leave behind. It is how well you protected the people who had to carry it forward while you were still alive.

Two Announcements

1/ If you’re going to be at Dakotafest in Mitchell, SD this week, I’d be proud to visit with you and shake your hand in real life. I’ll be there Thursday, August 21 in Booth 2611 in the Ag Tent.

2/ A lot of you know I had a peer group project for ag people. Heck, many of you were members.

I've been getting to know this great group, Prairie Family Business Association, over the past year. They're crushing what I wasn't very good at: facilitating valuable peer groups for family owned businesses & farms seeking transition support.

I get to do a Q&A session as part of this virtual event.

I’d love to be able to answer your questions, surrounded by peers, on Wednesday, August 27th.

I hope you’ll register - and if you do, please input the referral code “CLINT” so they know how you heard about it.

→ Here’s an article with more information on the event: “Stop Fighting On The Way To The Funeral Home”

→Here’s the direct link to sign up for the webinar: LINK (remember to use code CLINT)

Excited to visit with you at this Q&A!

Appreciate all of you who are committed to preserving rural legacies.

-Clint

DISCLAIMER: What you just read is not legal advice. It is not an offer to represent you or perform legal services. Reading this doesn’t enter us into an attorney-client relationship. It’s just informational and hopefully a bit entertaining—take it as that and nothing more. When in doubt, talk to your own lawyer.