Scott LaPresta, CTFA
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Key Takeaways
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For many high-net-worth individuals, wealth and estate planning tends to focus on asset growth, tax efficiency, and the eventual transfer of an estate to heirs and philanthropic beneficiaries. But an equally critical area that can be overlooked is incapacity planning. The reality is that cognitive decline, medical emergencies, and severe accidents can affect anyone at any time. Although such risks may increase with age, individuals of all ages can experience temporary or permanent impairment of their ability to make financial or medical decisions.
For individuals with significant wealth, the complexity of your estate, investment strategies, family trusts and, if applicable, operating businesses calls for holistic, proactive incapacity planning. This approach can help provide the continuity and stability your family will need during a time of great emotional stress. Putting a clear and well-documented plan in place can help ensure you have the time needed to think through and designate trusted individuals who will act on your behalf and can communicate your direction with your family.
Incapacity generally refers to a health-related condition that limits your ability to understand information or communicate decisions independently. From a legal standpoint, incapacity is typically determined under state law and often requires certification by one or more medical professionals. Importantly, incapacity is not always permanent, and in some cases, an individual may regain the ability to make decisions after a period of recovery.
Foundations for effective high-net-worth incapacity planning
Putting a durable power of attorney in place can be a natural complement to a revocable trust as part of a coordinated incapacity plan. While a trust governs assets titled in its name, a durable power of attorney provides authority over assets that are held individually, helping ensure that all aspects of your financial affairs remain under the direction of trusted decision-makers if you become incapacitated. A comprehensive incapacity plan for high-net-worth individuals should also account for investments, digital assets, insurance policies, and other components of your balance sheet that may otherwise be inadvertently neglected during a period of incapacity.
A durable power of attorney is essential for incapacity planning
A durable power of attorney allows you to authorize a trusted agent to manage your financial and legal affairs if you become incapacitated. You may grant your agent broad authority under your power of attorney or limit their powers to specific matters. This may include tasks such as making certain financial decisions, managing personal investment accounts, overseeing real estate or business interests, submitting tax filings, or handling financial transactions such as paying bills and transferring assets between accounts.
For estate planning, having a durable power of attorney in place allows your agent to act on your behalf after you become incapacitated. In contrast, under a standard or non-durable power of attorney, the agent’s authority ceases if you become incapacitated.
The details of your power of attorney and direction with respect to certain tasks or decisions can be tailored within legal limits1 to suit your needs. The document should reflect your unique circumstances and estate planning goals. For individuals with a revocable trust, a durable power of attorney generally applies to assets and accounts held outside of a trust. This could include personal property, retirement accounts, or bank accounts held in your personal name rather than in the name of the trust, or digital assets and digital accounts not owned by the trust.
If you only want someone else to take over managing your financial affairs if you are unable to do so yourself, you may structure your power of attorney to take effect only if certain triggering conditions are met, such as a doctor’s certification that you are incapacitated. This is often referred to as a “springing” power of attorney. While this approach allows you to maintain full control of your financial and legal decisions while you are competent, it can cause delays in decision-making in critical situations because of the need to verify your incapacity.
How a revocable trust can support your family through incapacity
Working with your estate planning attorney to establish a revocable trust allows you to plan for how the assets titled in the trust would be managed during your lifetime if you become incapacitated, unlike a will, which becomes effective only after death. Another benefit of proactively establishing a trust is that you can thoughtfully devote time to provide your direction for how and when assets will be managed and ultimately transferred to beneficiaries before you and your family are dealing with incapacity. Assets properly titled in the trust generally avoid probate, which is a public, potentially lengthy, and, in some circumstances, costly court process to determine how your estate should be settled and your assets distributed.
In most situations, when a revocable trust is created, you would serve as both the grantor, the person who creates the trust, and the initial trustee, the person responsible for holding title to the trust’s assets and managing them according to the trust’s governing document. Your trust document can outline the conditions under which a successor trustee may step in, such as a determination of incapacity and how that transition of responsibility occurs.
In the event of your incapacity, the corporate trustee or individual you name as successor trustee assumes responsibility for administering the trust and managing the assets held within it in accordance with the trust’s terms. Naming a successor trustee allows for continuity of the management of your assets and provides clarity as to who is authorized to act while you are incapacitated.
Serving as a successor trustee is a long-term responsibility that requires attention to detail, accurate recordkeeping, and consistent administration. While individuals can be named as successor trustees, if circumstances prevent an individual trustee from serving when needed, continuity in decision-making regarding your assets in trust could be disrupted. For this reason, some choose to name a corporate trustee as successor trustee to secure a reliable, professional, ongoing fiduciary that can carry out the trust’s administration over time.
In practice, adequate planning for incapacity often involves the coordination of documents for both your revocable trust and your durable power of attorney, with a trustee managing assets in trust and a power of attorney overseeing assets held in an individual’s name.
Investment oversight during incapacity
Because investments often represent a significant portion of a high-net-worth individual’s balance sheet, it is helpful to understand how investment oversight typically functions during a period of incapacity. When someone becomes incapacitated, responsibility for investment oversight depends on how assets are titled. Investments held in a trust fall under the authority of the trustee, while investments held outside the trust could be managed by the agent acting under a durable power of attorney.
Because incapacity is not always permanent, fiduciaries must balance the need to maintain liquidity and manage risk with the possibility that the incapacitated individual may later resume decision-making. As a result, investment decisions during incapacity are often focused on continuity and near-term needs rather than making dramatic changes to asset allocation and long-term investment strategy.
Include digital accounts in your incapacity planning
It can be easy to overlook your digital life when planning for incapacity, such as online bank and investment accounts, cloud-stored documents, email, online photo storage, and social media accounts. However, without access to such accounts, your family, your durable power of attorney, and your successor trustee may not understand the full scope of your affairs, be able to manage your accounts to transact or pay bills on your behalf, or access tax or other important account documents.
Incapacity planning should include secure methods for sharing credentials, access instructions, and an inventory of your digital assets with trusted individuals. Work carefully with your estate planning attorney to ensure that your credential sharing is compliant with your service providers’ and digital asset platforms’ terms of service as well as applicable state and federal privacy laws. Doing so can help provide continuity in the management of your digital accounts and reduce the risk that valuable digital property is not forgotten or inaccessible.
Centrally organize your insurance policies
Insurance policies are another important part of a broader estate plan, yet they can also be overlooked in incapacity planning. When your durable power of attorney steps in to manage financial matters, it is critical that they know what insurance policies exist and where those policies are held. Without a clear inventory of your various insurance policies, policies may lapse or be forfeited due to missed premium payments, or valuable benefits may go unused simply because your trusted persons or agents are not aware of your insurance benefits or coverage.
If a policy lapses, you or someone on your behalf will need to follow the insurance carrier’s process to request that your insurance policy be reinstated. This could become particularly problematic for long-term care insurance, where benefits are intended to support care needs during periods of declining health. Organizing insurance information in advance and ensuring trusted individuals, such as an agent under a durable power of attorney or trustee, know where to find it can help ensure continuation of coverage you and your family may need and will expect.
Planning ahead for healthcare decisions
The need to make medical decisions can arise under stressful circumstances, so documenting your preferences in advance can provide clarity when it is needed most. Authorizing trusted individuals to act on your behalf can help medical professionals act in accordance with your choices even if you are unable to communicate your intentions. These documents are invaluable for proactively defining your directions for medical care and designating your trusted decision-makers. Changes in your healthcare and medical needs should also be made in alignment with your financial plan and insurance coverage so that you can maintain and make full use of any applicable coverage, and additional sources of funding can be drawn upon as needed.
Designating someone to make health care decisions on your behalf
A durable power of attorney for health care, sometimes called a health care power of attorney or medical power of attorney, empowers another person of your choosing to make health care decisions on your behalf. This person is often referred to as your health care proxy, agent, or representative. Their responsibilities may span from decisions such as selecting medical providers or approving treatments, to decisions about continuing or discontinuing medical care, even if that care is life-sustaining.
A durable power of attorney for health care generally takes effect when you are determined to be incapacitated and unable to make health care decisions for yourself. If there is a favorable change in your health status and you wish to change or revoke your durable power of attorney for health care, you may do so as long as you are able to make decisions for yourself.
Note that a durable power of attorney for health care is distinct from the durable power of attorney that authorizes an agent to make financial and legal decisions on your behalf. The person you designate to make health care decisions on your behalf does not have to be the same individual you appoint to handle financial and legal matters under a durable power of attorney. It is important to consider the various qualities and circumstances that would lead you to select the family members or individuals you wish to act as your health care proxy.
Documenting your preferences for life-sustaining care
A living will is a legal document that outlines your preferences for life-sustaining treatments if you are seriously ill or injured and unable to communicate. Life-prolonging measures may include interventions such as cardiopulmonary resuscitation (CPR), mechanical ventilation, or artificial nutrition and hydration. A living will is legally recognized but not always legally binding in every circumstance, which is why choosing a trusted health care proxy is essential to ensure your preferences are respected as closely as possible.
While some use the term “advance directive” interchangeably with a living will, an advance directive is a broader term that includes your living will and your durable power of attorney for health care documents. The two are interrelated, as your health care proxy is responsible for carrying out the wishes expressed in your living will. In some states, both documents may be combined into a single form.
Authorizing access to your medical information
Health Insurance Portability and Accountability Act (HIPAA) authorization forms are legal documents that are used to designate who can access your protected health information and communicate with your medical providers about your condition and treatment. Individuals of your choosing, known as authorized representatives, are listed on the form to indicate your permission to share medical records, test results, and other private health details with them. You may choose to grant broad access to your medical information, or you can exclude certain categories if you are concerned about privacy, such as mental health records, certain communicable diseases, or treatment for substance use.
Having trusted individuals authorized to handle your protected health information can be invaluable in the event of incapacity. For example, you may want your health care proxy to complete a HIPAA authorization so they can access information necessary to make decisions if you are unable to do so yourself. In addition, you might consider authorizing other trusted individuals to access your medical information, such as a spouse, adult child, or close family member, to avoid a gap in access if your health care proxy is unavailable.
Incapacity considerations for business owners
Because a business owner’s personal wealth may largely be tied up in the value of their ownership interest, and their cash flow may be dependent on the income they receive from the business, it is important to consider how you want your role in the business and your ownership stake to be handled if you become incapacitated.
Even if your estate plan accommodates your directions for incapacity, if the operating agreements for your business do not address succession or the transfer of decision-making responsibilities, your personal wealth may ultimately be impacted. Without clear provisions in place, your family may no longer be able to rely on steady income, and uncertainty around leadership could disrupt operations, erode confidence among board members, partners, or lenders, potentially diminishing the value of your ownership interest.
Succession planning considerations for business owners
Having a clear succession plan that outlines a strategy for the company’s continued leadership can be vital to financial stability in the event of incapacity. A well-defined plan outlines who will assume your management or operational responsibilities and how ownership interests will be transitioned, whether through a sale to co-owners, employees, an outside buyer, or transfer of ownership to a family member. For those who wish to keep the business in the family, succession planning can provide a structure to better prepare the next generation for future ownership.
Employing a trust to support business continuity
Trusts can serve as a valuable framework to ensure continuity if a business owner becomes incapacitated or passes away. By placing ownership interests in trust, a trustee can carry out the founder’s instructions as outlined in the trust’s governing document.
Examples of this could include stepping in to handle the day-to-day management of the business, facilitating the transition of ownership to the next generation, or preserving the business until a sale can be completed. The specific advantages of using a trust for business succession depend on the type of trust and its terms as well as the terms included in the business’ governing document(s), but other benefits may include estate and gift tax optimization, asset protection, and ensuring fair and objective treatment of the trust’s beneficiaries.
Depending on how your ownership interests are titled, whether held individually or in trust, and whether you have a buy-sell agreement or funding mechanisms such as life insurance in place, additional planning may be necessary. Incorporating clear incapacity provisions into your business’s governing documents and establishing liquidity arrangements in advance can help provide continuity and financial stability for your family, your business partners, and the enterprise itself.
Family communication and governance considerations
Planning for incapacity is not only about naming decision-makers through formal documents, but also about how families communicate during uncertain and emotional moments. Even if you or your loved one may be unable to make financial, legal, or medical decisions independently, that does not mean you should be excluded from conversations altogether. When possible, keeping a loved one informed about what is happening with their affairs can help provide clarity and reassurance for both the individual and their trusted agents that the proper direction is being carried out as intended. Further, keeping close family members informed, even if they have no legal role as your agent, can help avoid confusion and ease stress that may arise between family members during such a period of uncertainty.
When determining who might serve to make decisions on your behalf, you might consider which family members may be better suited for different responsibilities based on factors such as proximity and where they reside, their temperament, and their experience with financial, legal, or medical matters. You may also wish to have thoughtful conversations in advance about whether a spouse, partner, adult child, or another trusted individual is best positioned to serve in this role. Establishing contingency plans, including the possibility that two primary decision-makers could be incapacitated at the same time, can help provide continuity and reduce uncertainty during an already difficult period.
Taking time to explain these decisions in advance to those you have designated to make decisions on your behalf, as well as other close family members, can help your family understand your rationale, their role, and what you expect of them in this capacity. In addition, defining roles and establishing communication expectations through family governance documents or within a trust document can provide further clarity, reducing the need for decisions to be negotiated among family members during a period of incapacity.
Incapacity as another element in the regular review of your estate planning documents
As you age and your family life evolves, estate planning documents should be reviewed periodically to ensure they reflect your intentions and current circumstances. In particular, if you have named an adult child or other family member as a trusted agent, their ability to serve may change as they age or as their personal circumstances change.
In addition to regular reviews, a significant life event may cause you to adjust how you have structured direction for your incapacity. Such life events could include a significant change in health, marriage, divorce, or a major liquidity event such as the sale of a business or receipt of an inheritance that alters the complexity of your circumstances. A change in residence could also be an important triggering event to revisit your plans, as state laws governing estate planning documents pertaining to powers of attorney, trusts, and health care directives may differ.
If your estate planning documents are outdated, incomplete, or unclear, this could create challenges for you and your family, such as delayed access to accounts, an inability to make timely medical or business decisions, and administrative hurdles that may require additional time and expense to establish decision-making authority. Gaps in planning can also place an unintended burden on your family members and increase the risk of confusion or conflict among them when determining your intentions.
Be prepared for incapacity with comprehensive estate planning
High-net-worth individuals and families face unique estate planning complexities given the breadth of assets, liabilities, and possible business interests that make up their estate. A comprehensive estate plan should balance goals for the transfer of your wealth across generations while protecting your estate by anticipating a wide range of outcomes that may be difficult to consider, such as incapacity, where failing to plan could be a far greater risk to the stability of your family’s livelihood and your long-term legacy.
At Commerce Trust, your private wealth management team is comprised of estate planning, financial planning, tax management, investment, and trust administration specialists who will approach incapacity planning for you with a holistic view. Your team can help identify potential gaps in your estate plan and coordinate with your estate planning attorney to put incapacity planning measures in place to outline your intentions and ensure your documents align with your goals.
Contact Commerce Trust today to learn more about how our comprehensive, team-based approach to private wealth management considers the various dimensions of your personal situation as it changes over time, to help preserve your wealth and legacy amid unforeseen circumstances.
1 Specific power of attorney laws vary by state.
*Commerce Trust does not provide tax advice to customers unless engaged to do so.
The opinions and other information in the commentary are provided as of March 12, 2026. This summary is intended to provide general information only, and may be of value to the reader and audience.
This material is not a recommendation of any particular investment or insurance strategy, is not based on any particular financial situation or need, and is not intended to replace the advice of a qualified tax advisor or investment professional. While Commerce may provide information or express opinions from time to time, such information or opinions are subject to change, are not offered as professional tax, insurance or legal advice, and may not be relied on as such. Consult an attorney for legal advice, including drafting and execution of estate planning documents.
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