Preparing for Incapacity

Imagine driving home from a holiday party this season and the unexpected occurs – Santa’s sleigh crashes into your vehicle! Leftover pumpkin pie and dressing splatter all over the reindeer. Jingle bells, toys, and cookies are strewn across the street in a 30-yard radius. Santa and his crew speed away without a scratch to finish deliveries to all the good boys and girls across the world. You, however, are incapacitated and require an emergency trip to the hospital, where you experience loss of consciousness (with visions of sugar plums) until Valentine’s Day.

Even without reckless reindeer on the road, about 750 car wreck-related injuries occur over the holiday season in Oklahoma, according to the most recent Fact Sheet published by the Highway Safety Office of the Oklahoma Department of Public Safety. Because car accidents occur so commonly, they provide a perfect illustration for imagining how easily any of us could become incapacitated. Any one of us could experience an accident or an illness and become unable to manage our day-to-day affairs, like paying our bills or driving to our doctor’s appointments.

What can we do to prepare for a season of life where we simply cannot take care of ourselves? Such a season could affect our physical abilities, mental abilities, or both. It could involve temporary impairment for only a season or permanent incapacity for the rest of life. Incapacity could occur slowly and over a long period of time, or it could occur suddenly and unexpectedly. The legal definition of “incapacity” incorporates a broad spectrum of circumstances, including the following:

• impairment due to mental illness or disability;

• impairment due to physical illness or disability;

• impairment due to drug or alcohol dependency;

• the inability to meet essential requirements for health and safety; and/or

• the inability to manage financial resources

Preparing for a season of your own incapacity could provide a huge blessing to your family and others who depend on you. Here are some ways you can prepare for the possibility of incapacity:

1. Appoint a person who can act for you in legal and financial matters. This person, your “agent,” is appointed in your Durable Power of Attorney. In case you ever need a court-appointed guardian, you can utilize your Durable Power of Attorney to nominate the person you would want to serve as your guardian.

2. Appoint a person who can act for you in making health care decisions. This person, your “Health Care Agent,” is appointed in your Health Care Power of Attorney. He or she can be authorized to communicate with your doctors and medical caregivers about your care and make decisions on your behalf if you are unable to do so. In case you ever need a court-appointed guardian, you can utilize your Health Care Power of Attorney to nominate the person you would want to serve as your guardian.

3. Appoint a person who can make decisions about end-of-life matters. You should have an Advance Directive in place, to document your decisions about the type of care you would want to receive if you become incapacitated and experience an end-of-life condition, such as becoming persistently unconscious or terminally ill. An Advance Directive also allows you to appoint a person, your “Health Care Proxy” to make sure your wishes, as expressed in your Advance Directive, are carried out by your health care providers.

4. If you already have these important documents in place, make sure your family members know where these documents are located and how to use them. Make sure these documents are accessible to those who might need them. Also, if you have appointed one of your children before another to serve an important role in your care, please consider explaining your decision to your children while you have the capacity to do so in order to avoid potential family strife after you are no longer able to communicate your wishes.

5. Talk to your family members and/or close friends about what information they will need to know if you become unable to take care of yourself and/or unable to continue taking care of them. This information includes the name and contact information for advisors you trust to assist you and your family during a period of incapacity.

Inheritance of Digital Assets

by Karla McAlister

We live in a changing world, a seminar I attended this summer alerted me to an area I had not really encountered in estate planning because it is such a new issue. It was a wakeup call for me personally and I believe our clients will also benefit from considering these issues regarding the management and disposition of digital assets. A practical example is when I was contacted by the children of a client because they were unable to access bank accounts for their parent. The parent is now incapacitated and only used online banking, but she could not remember her password and the children could not locate a written list of passwords. They wanted to know if I had a list. Unfortunately, I did not have any information in my file.

Although there is no official definition of “digital asset” yet, you can think of it as any information stored electronically, either online or on an electronic device. This includes text, images, multimedia, travel rewards and points, domain names, games, music, digital books, home security, online storage accounts personal property stored in digital format and also includes words, passwords, characters, codes or contractual rights to access that digital content which is stored online or offline. There are online corporations such as Google, Apple, Microsoft and Facebook and blogs, personal websites, online banking and other online accounts.  With the average person having twenty-five online accounts, digital inheritance has become a complex issue. They may be sensitive such as banking and medical information or shared such as social media or contacts in forums.

Two thirds of all digital content is created by individuals, not businesses or organizations. Your “digital assets” increase each time you open a new account, send an email, snap a picture, book a flight, make a purchase or post a comment. Fifty one percent of adults use their bank’s website for banking transactions and seventy-six percent of adults in the United States have a social network site. It has become normal to store data electronically in smartphones, computers and the “cloud” and to conduct transactions electronically. These assets may have monetary value and sentimental value to you and your family.

There are several ways to plan for management of digital assets upon incapacity or death. First, keep a complete list of passwords, online user accounts and other digital assets and update the list often. You should include security questions and answers to ensure fiduciary access as well. A printed copy should be kept in a safe location. You should consider including specific instructions in your estate planning documents regarding management of the digital assets at your death or incapacity. The third-party providers will want explicit provisions to allow your fiduciary to have access to your digital account.

There is a push for a Revised Uniform Fiduciary Access to Digital Assets Act (RUFADA) which has been adopted in thirty-five states, but it has not been adopted in Oklahoma. The goal of RUFADA is to respect a user’s intent reflected in online account options and dispositive documents.  One of the biggest hurdles for fiduciaries is that most digital accounts are bound by terms-of-service agreements and these terms of agreement (which most people do not read) determine what happens to an account upon the death of its owner.  Some terms of agreement prohibit a user from allowing anyone else  to access his or her account. Facebook’s terms-of-service agreement prohibits sharing passwords with anyone. Yahoo! terms-of-service provide that accounts are non-transferable, and the account terminates upon the user’s death and the receipt of a copy of the death certificate and the content is permanently deleted, which may not be what the family or owner intends. RUFADA states that users may consent to the disclosure of their digital assets and it will override any terms-of-agreement.

However, there may be electronically stored information a client does not want to share with family members or beneficiaries and those wishes should likewise be included and addressed in your planning. Specific directions may be made to delete private data.

With new technologies and innovation comes new complexities and considerations in your estate planning.  Hopefully, this article will help jump start your effort to help your loved ones by addressing these issues in your planning