As they say: “timing is everything.” When it comes to getting affairs in order through an estate plan, this is certainly true. Aside from the obvious case of passing away before executing an estate plan, there is another, often thorny situation when it becomes too late for someone to execute their own estate plan: when they are too ill to understand and appreciate the nature of the act.
I receive more than a few calls from people seeking to establish an estate plan “for” a third party, usually in response to some emergency such as a sudden illness. Unfortunately, if the principal — the person who owns the assets that will be subject to the estate plan — is too ill to make their own informed medical decisions, then under the law, the principal lacks the legal ability (called capacity) to sign a document like a trust or a power of attorney. While the principal might have the capacity to sign a will, if the principal owns sufficient assets, then their estate ends up in probate if they pass away before they recover.
The nuances of legal capacity are beyond the scope of this post, but here is a rule of thumb to keep in mind: when someone is too ill to make their own informed medical decisions, then they are too ill to sign a trust or a power of attorney. In these cases, there is another option available for the family — conservatorship court. A conservator can be appointed, with the express authority to sign an estate plan on behalf of the ill family member. Conservatorship court is not an ideal solution, but if it becomes the only way to avoid probate, then it’s the best option a family may have. Of course, people can avoid the emergency scenario by getting their estate plan completed prior to illness.