What Do I Do When One Spouse Becomes Incapacitated?

Are you concerned about protecting your future? Sitting down with a Michigan estate planning attorney can be one of the most important things you and your spouse do when it comes protecting your assets and planning for the future while you’re still alive as well as making clear what happens to your belongings after you pass away.

A Michigan estate planning attorney can review your individual situation and provide guidance over what to expect and answer questions. During this meeting, don’t forget to think about what happens when one spouse becomes incapacitated while the other remains healthy. This can come up in unexpected situations, such as attempting to sell your home when a notary public refuses to notarize the signature of one spouse who appears to be incapacitated and therefore, unable to legally sign these documents. If the house is jointly owned, as nearly all married couples’ homes are, then both owners will need to sign off on the sale. If one spouse has died, then the other will become the sole owner and can do as they wish, but what if the other spouse is alive, but not competent? Without the right power of attorney, the competent spouse will need to go to Probate Court. Many people express frustration when they realize that they are unable to sell the home that they’ve lived in for 50 years without the court’s permission.

It is very common for married couples to say things like, “it’s fine, we’re joint on everything.” Except that’s usually not true. It may be true for the house, for the checking and savings, maybe even for some investment accounts. But what about retirement accounts? If you have an IRA, 401k, 403b or other qualified account, your spouse is not the co-owner of that account. When people say their spouse is “on” their IRA, what they mean is the spouse is the primary beneficiary so the money will go to the spouse when they die. But what if they’re alive, but not competent? What if the competent spouse needs to access IRA assets? What if they need that money to pay for care or to help them pay the bills? With the right power of attorney, they can access the retirement funds, but without one, they’re going to have to petition the Probate Court.

Let’s look at a very typical family. Husband and wife in their late 70s. They own their home jointly, they have joint checking and savings accounts, husband has $250,000 in his IRA, wife has $100,000 in hers. They have named each other as beneficiary on their IRAs. They think they’re “all set” and, in a way, they are. If husband dies, then the IRA rolls over to wife and she becomes sole owner of the home and the bank accounts. That’s about as simple as it gets. But what if husband develops Alzheimers and needs memory care? Wife cannot access his IRA money except for the required distributions. After husband goes to memory care, wife decides the home is too much for just her and wants to sell it and downsize. Unfortunately, she can’t sell the home because the sale requires husband’s signature and he is not competent to sign. The majority of their wealth is locked up in the home and husband’s IRA and wife cannot access either one. She needs to petition the Probate Court and get the judge’s permission to allow her to access her husband’s IRA and to sell her own home. All of that hassle, cost and time could be avoided with a well drafted Power of Attorney which allowed her to access the IRA and to sell the home.

One final consideration: Not all Powers of Attorney are created equal. A Power of Attorney does not and cannot grant someone total blanket powers to handle all legal and financial affairs. A Power of Attorney is actually a list of specific powers, i.e. banking powers, real estate powers, litigation, care planning, etc… Many Powers of Attorney are drafted very narrowly and may limit the ability of the Agent to take necessary action in the event of a crisis. Just because you have a Power of Attorney does not necessarily mean your Agent is free to act in your best interest. If you have an existing Power of Attorney, it should be reviewed every few years by an estate planning and elder law attorney to ensure it is kept up to date with the changing law and your changing needs.

Traditional estate planning focuses entirely on death and transfer of assets with little consideration paid to the increasing realities of incapacity, dementia and long-term care. Many people fail to incorporate important considerations about incapacity when consulting with their knowledgeable Michigan estate planning lawyer. Planning ahead shows awareness and knowledge about the possibility of these challenging issues and can give you peace of mind that should something happen to you, your spouse will have the necessary authority to act on your behalf.

 

 

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