Mental health issues have become increasingly prevalent since the onset of COVID-19, affecting one in five people in the United States. As individuals navigate the challenges of estate planning, it is crucial to take into account the potential impact of mental health conditions on both the creator of the documents and their beneficiaries. Conditions such as bipolar disorder, schizophrenia, post-traumatic stress disorder (PTSD), anxiety, and depression can all complicate the estate planning process.
For the individual creating the estate-planning documents, it is essential to ensure that any doubts about their competence are addressed. If the creator has a history of mental health issues, obtaining a legal capacity assessment can help prevent future questions about their decision-making abilities. This evaluation confirms an individual’s legal decision-making capacity and provides reassurance when creating estate plans.
One critical document to include in the estate plan is a financial power of attorney. This document designates a trusted person to manage the donor’s financial matters if they become unable to do so themselves. The designated person can have authority over all financial decisions or specific matters, depending on the donor’s preferences.
Another crucial document is the medical power of attorney, which grants another individual the authority to make medical decisions on behalf of the donor in the event of incapacitation. It is crucial to discuss wishes and preferences with the designee to ensure alignment in decision-making.
Having these documents in place not only ensures that the donor’s wishes are respected but also helps prevent conflicts among family members. It is important to avoid appointing a healthcare proxy with conflicting interests, such as being a doctor within the donor’s healthcare specialists, to maintain impartial decision-making.
When choosing individuals for financial and medical powers of attorney, it is generally advisable to select different people for each role. This separation mitigates potential conflicts of interest and ensures that critical medical care is not withheld due to financial considerations.
In some cases, it may be necessary to make provisions for long-term care within the estate-planning documents. This can involve setting aside funds for long-term care insurance or creating a savings account dedicated to mental healthcare expenses. Clear instructions regarding preferred mental healthcare providers and types of treatment can also be included in the will or trust documents.
If a trust is created, it may be beneficial to utilize professional trustees who can effectively manage the assets according to the guidelines established in the trust documents. Professional trustees can be appointed for the donor, the donor’s spouse, a child, or any other relevant party, ensuring that the assets are handled responsibly.
When caring for a spouse with a mental illness, it is crucial to consider their well-being within the estate-planning process. Provisions should be made to provide for the spouse in the event that the primary spouse becomes incapacitated or passes away. Regular review of the estate-planning documents is essential to ensure that they remain up-to-date and relevant as mental illnesses can change over time.
It is also important to be mindful that mental illness may impact an individual’s ability to manage money responsibly or make sound financial decisions. Individuals receiving money or inheritances may be vulnerable to predatory schemes that could rapidly deplete their assets. Taking precautions to protect their financial well-being, such as establishing discretionary trusts or Special Needs Trusts, can help preserve government benefits and provide ongoing control over designated assets.
A discretionary trust, also known as a Special Needs Trust, allows assets to be held separately from the beneficiary, thereby preserving their eligibility for government benefits. A trustworthy trustee should be selected to distribute the assets wisely, ensuring that the beneficiary’s needs are met. Distributions can be made as needed or in specified increments, depending on the individual’s circumstances.
When choosing an executor for the will, it is crucial to select someone who does not have a mental illness. While it may not always be possible to know if someone has a mental illness at the time of creating the documents, it is wise to name an alternative executor or trustee to prevent potential complications.
Collaborating with an estate-planning attorney can help individuals navigate the challenges associated with mental health issues and ensure that their plans are well-prepared. Regular review of the estate-planning documents, ideally every couple of years, helps ensure that they continue to align with the individual’s evolving circumstances and needs.
In conclusion, addressing mental health concerns within estate planning is crucial to protect the interests of both the creator of the documents and their beneficiaries. By considering the impact of mental health conditions, establishing appropriate documents, and regularly reviewing the plans, individuals can navigate these challenges effectively and provide for their loved ones with confidence.
