Incapacity Planning is No Laughing Matter
Celebrity Estate Plans Series Part 3 of 4
In the last two weeks, we've explored how celebrities have (or haven’t) prepared for their deaths. In this third part of our four-part series, we tackle a topic that's often overlooked: incapacity. No one likes to think that they may one day become incapacitated. However, planning for incapacity is crucial. Because, unlike death, it’s not guaranteed for everyone. However, if you do become incapacitated, having a plan in place ensures your wishes are honored. That’s why incapacity planning is no laughing matter.
Jay Leno’s Case is No Laughing Matter
To illustrate the importance of planning for incapacity, we'll examine the real-life court case of Jay Leno and his wife, Mavis. It's a serious matter you shouldn't ignore.
The Leno case demonstrates the consequences of becoming incapacitated without a plan. We can learn several key lessons from their experience:
Understanding what incapacity is and what it isn't.
Knowing what a spouse can and cannot do with the other spouse’s financial affairs.
Recognizing how a lack of planning can lead to court involvement and the public exposure of your private matters.
We'll explore these topics in detail, emphasizing their relevance even if you've never hosted "The Tonight Show."
What Does Incapacity Mean?
Let’s start with the basics: what do we mean when we’re talking about “incapacity”?
What Incapacity Is and What It’s Not
If you become incapacitated, you lose the ability to make sound financial, medical, or legal decisions for yourself. You may even make harmful decisions or be unable to communicate at all. Incapacity can arise from various circumstances. Situations like a tragic accident, a serious end-of-life illness, or aging-related challenges like dementia or Alzheimer’s. Like death, incapacity can strike at any time and at any age. Once it happens, it’s too late to get your affairs in order, leaving your loved ones with a mess.
This may seem obvious, but stay with me: incapacity occurs while you're still alive. I say this because estate planning, to some degree, has much to do with timing. You can have a plan and create documents that deal with your incapacity. However, that plan and documents become null and void once you die, and another plan and set of documents are needed.
Here's why this matters to you. Many people are familiar with a document called a Power of Attorney, and you might even hold authority for an aging relative under one. However, most people don’t realize that the authority granted under a Power of Attorney ends as soon as the person granting the power dies. You can access your loved one’s checking account to pay bills while they’re alive. However, when they die, your access ends immediately upon their death. At that point, you must obtain separate authority—usually from a court if assets are not held in a trust—to manage the remaining assets after death.
Your incapacity planning and post-death planning need to work together. This ensures a smooth transition and makes things easier for your loved ones. Now, let's look at the Leno case.
So, What Happened In the Leno Family? (And What It Means for You)
Mavis Leno, Jay's wife of over 40 years, is battling dementia. She can no longer manage her financial affairs. Jay had to go to court and essentially file a lawsuit against his own wife to gain control of her finances. After a few months, the court ruled in Jay's favor and granted him the authority he needed.
That’s essentially the entire story. But we can’t stop there! Even from just three simple sentences above, several key takeaways exist.
Here are the highlights:
Even though they were married, Jay did not have automatic authority to manage Mavis’s finances. And neither will you if you’re married and your spouse has separate assets. Any assets or accounts you own are your property and your property alone.
Marital status is irrelevant. And, if you don’t have advance planning in place, your spouse could need to go to court and sue your “estate” to get appointed and be able to take control of your assets.
Leno had to file a lawsuit (against his wife) to gain control of his wife’s finances. No matter what state you’re in, this is the process. Without advance planning, someone will need to go to court to get authority if you become incapacitated. This process will cost time (usually a few months) and money. While waiting for the court's decision, you won’t be able to pay your spouse’s bills using their money. They might even spend it unknowingly.
No Incapacity Planning Options
That leaves you with two options:
You can pay the bills with your money and then get reimbursed later. This may be fine, especially if you have the financial means. But if you don’t have immediate access to cash, say your spouse paid all the bills from their account, this could mean trouble and potential loss of the asset. Or, bills simply go unpaid. Maybe you can explain the situation to the financial institution, and they will be patient while the court process plays out, but this doesn’t always happen.
Court Involvement Invites Conflict
The court process is set up for conflict. And, the more conflict there is, the longer the process will take. In Leno’s case, he and Mavis have been married for over 40 years, and it’s their first and only marriage (relationship goals, right?). Given this fact, it’s reasonable to assume that no one challenged Jay’s request. But what if one of them had been married before and had children from the prior marriage? And what if one of those children wanted to ensure they got their inheritance and didn’t want the step-parent to have any control over the money? Sadly, this happens all the time. When it does, the case can go on and on, meaning court costs go up, and the assets in question could be at risk due to the time delay.
Private Information Becomes Public Knowledge
Leno’s personal and family information became public knowledge, but not because he’s famous. In most States, courts require you to disclose your address, your family members and their addresses, and information about the financial assets. The Leno family's story is available for all of us to read. Not because he’s famous, but because they had to go to court.
Beware of Scammers!
This can be problematic because scammers are paying attention. They tend to pay particular attention if you (or someone you love) are vulnerable, especially if you’re older. I could write books about how often older people fall prey to these scams. And they’re all terribly disturbing.
So, what have you gleaned from these insights so far? If anything concerns you, know there is a much better way this could have been handled. And this better way lies within your reach.
How Can You Avoid This Scenario
An Estate Plan Keeps Your Affairs Private and Your Family Out of Court and Conflict
An estate plan prevents issues like those Jay Leno faced, where he had to sue his wife’s estate for access to her accounts. With an estate plan, you ensure a smooth transition from capacity to incapacity and then to death. Assets become available immediately, without delays. An estate plan also keeps you and your loved ones out of court, avoiding conflict. It saves time and money while keeping your affairs private.
When you work with me on your estate plan, I’ll ensure it stays updated throughout your lifetime. This is crucial because an outdated plan won’t work when you need it. Without updates, you could end up in court, like the Leno family. Many attorneys don’t keep plans current, but I’ve seen too many fail because of this. Together, we’ll review your plan at least every three years and make any necessary updates.
We’re Here for You Throughout All Of Life’s Changes
Incapacity planning is more crucial than ever, especially with cases of dementia on the rise. According to Alzheimer’s Disease International, over 55 million people worldwide currently have dementia, and that number is expected to increase to 78 million by 2030. Whether you’re diagnosed with dementia, another severe illness, or a terrible accident that results in your incapacity, an estate plan will help ensure you’re prepared, no matter what happens.
And, I know about the importance of incapacity planning on a personal note. You see, my dad had an unexpected stroke. That stroke left him paralyzed and unable to speak. Thank goodness he had done incapacity planning beforehand. Or, my family could have been in a situation similar to Jay Leno.
As a Personal Family Lawyer Firm, we help you create an estate plan so that your loved ones stay out of court and conflict and have a plan that works when you (and they) need it. Once you’ve created your plan, you can rest easy knowing your wishes will be honored, your loved ones cared for, and your personal information kept private.
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This article is a service of Kristen N. Mackintosh, The Happy Lawyer, at Mackintosh Law, PLLC, a Personal Family Lawyer® Firm. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That's why we offer a Life & Legacy Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Life & Legacy Planning Session™.
The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer® firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.
