Incapacity is not an especially arcane legal term. Most laypeople can understand incapacitation as a state of being in which an individual is unresponsive or unable to act. Examples may include individuals who are comatose, heavily sedated, or paralyzed.
Legally, the definition of incapacitation is broader: an absence of physical or mental abilities to manage their own finances, healthcare needs, property, or personal care. This generally covers any physical or mental ailments that render an individual unable to act on their own behalf.
Additionally, incapacity can be defined as an inability to understand the actions or consequences of signing or creating a binding legal document. This definition is commonly used for annulments, arguing that the lack of capacity to understand the marriage or prenuptial contract renders the entire process null and void due either to temporary incapacity from alcohol and drugs or through advanced age or lack of knowledge of the language being spoken.
Incapacity can also have more niche definitions. In terms of workers compensation, the standard incapacity can be met if an individual is unable to perform their job due to an injury. In terms of the Family Medical Leave Act, incapacity is defined as the inability to perform regular daily activities including attending work or school due to the symptoms, recovery, or treatment of a serious health condition.
The most common use of the various standards and definitions of incapacity in trusts & estate law centers on power of attorney. While durable power of attorney allows the designated agent to wield their power in any situation, some testators prefer their power of attorney to be conditional, often triggering upon their incapacitation.
While conditional power of attorney can make many individuals feel safer about the limits placed on their agent’s power, there are a number of drawbacks that must be weighed with this course of action. Chief among the concerns are bureaucracy, consistency, and delay.
Bureaucracy is a part of most institutions in which the exercise of power of attorney would be necessary. Hospitals, physician’s offices, stock brokerages, real estate offices, and banks are just a few entities that may have lengthy procedures that are required to certify the temporary authority of an agent.
Since the agent’s power is contingent upon the incapacitation of the individual, the institution must first confirm the incapacitation of the individual before beginning the transaction or business with the agent. This has the potential to become a web of red tape as various agencies request the current status of the individual, an issue that could be further impeded by HIPAA or other privacy regulations, leading to difficulty in authorizing the agent’s power of attorney.
Another setback faced by temporary authorization of power of attorney privileges is consistency in accepting the incapacitation of the grantor. An individual looking to establish a power of attorney upon their incapacitation will need to provide a list of conditions or circumstances that merit incapacitation. Is it enough for the individual to merely be unconscious, such as when they are asleep? Or does it require a diagnosed medical condition to render the individual incapacitation?
These questions may not have clear answers and the circumstances that render the grantor incapacitated may fall outside the specifically enumerated clauses that the power of attorney contract acknowledges. Whether through a difference in interpretation or a legal technicality, institutions looking to protect themselves from liability may not consistently accept the agent’s authority or the grantor’s incapacitation, gridlocking the process.
Even assuming that the grantor has established an airtight definition of incapacitation and has notified their institutions about the circumstances under which to grant the agent’s authority, there will still be an unavoidable. Due to the clause specifying the need for incapcitation, the agent is powerless to act until a medical professional is able to declare the grantor “incapacitated” according to their own medical opinion and the terms of the contract. This delay can cause arranged financial deals to fall through, deadlines to be missed, and in the worst instances, opportunities to make vital, life-changing decisions, to be missed.
While conditional power of attorney can sound safer, it is important to carefully consider the cons with the pros. In exchange for increased scrutiny of the incapacity clause, the grantor may sacrifice efficiency or even unintentionally handicap their agent’s ability to execute the grantor’s wishes.
If you want to craft a durable or conditional power of attorney, you will need the help of a trusts & estates attorney. An experienced trusts & estates attorney can help you achieve your specific power of attorney goals.
This can range from crafting a carefully limited durable power of attorney that honors your goals and wishes, to making an airtight conditional power of attorney that grants your agent the power they need to aid you in your time of crisis. In either event, a trust & estates attorney’s knowledge and experience with the local law can ensure your objectives are met.