Author: Brenton McWilliams
What is incapacity? What does it mean to be incapacitated? I have a lot of conversations about how incapacity planning is a very important part of a comprehensive estate plan. But, what does it mean to be incapacitated, and what exactly are we planning for when we discuss incapacity?
What is Incapacity?
The general idea of incapacity is a lack of sufficient understanding or capacity to make or communicate responsible decisions stemming from a variety of reasons. In the context of financial decision making, the general idea of incapacity is an inability to manage assets or financial/business affairs. As life expectancies increase, our expectation, and what we typically plan for, is that incapacity would normally manifest from illnesses or cognitive decline brought about by advanced age.
Incapacity in Specific Contexts
Incapacity has several definitions for specific contexts in Alabama’s statutes. Also, when incapacity is used in an agreement or other document, such as a revocable living trust, there may be a specific definition of incapacity within the document.
Power of Attorney
Alabama’s Power of Attorney Statute at Ala. Code § 26-1A-102 defines incapacity as the:
“inability of an individual to manage property or business affairs because the individual:
(A) has an impairment in the ability to receive and evaluate information or make or communicate decisions even with the use of technological assistance; or
(B) is: (i) missing; (ii) detained, including incarcerated in a penal system; or (iii) outside the United States and unable to return.”
Guardianship
A guardian may be appointed for an incapacitated person, defined by Ala. Code § 26-2A-20 as:
“Any person who is impaired by reason of mental illness, mental deficiency, physical illness or disability, physical or mental infirmities accompanying advanced age, chronic use of drugs, chronic intoxication, or other cause (except minority) to the extent of lacking sufficient understanding or capacity to make or communicate responsible decisions.”
Conservatorship
In the establishment of a conservatorship, it may be necessary for a finding by the court that:
“(i) the person is unable to manage property and business affairs effectively for such reasons as mental illness, mental deficiency, physical illness or disability, physical or mental infirmities accompanying advanced age, chronic use of drugs, chronic intoxication, confinement, detention by a foreign power, or disappearance;” Ala. Code § 26-2A-130.
Advance Directive for Health Care
As one condition for an advance directive for health care to become effective, Ala. Code § 22-8A-4, requires a determination by the attending physician:
“that the declarant is no longer able to understand, appreciate, and direct his or her medical treatment…”
Agreement or Revocable Living Trust Definition
A revocable living trust or other document, may provide a definition of incapacity within the document such as:
“A person is considered to the incapacitated if the person is unable to effectively manage the person’s assets or business affairs, whether as a result of illness, age, use of prescribed medications, drugs, or other substances; or any other cause.”
For more information about incapacity planning, please review this article “Why are a Financial Power of Attorney and Healthcare Power of Attorney Important in Alabama?” If you need help with estate planning, please call us at (251) 215-9275 or write us on the contact page to discuss how we can help.
