Part VI. Incapacity & Estate Planning
I get it. Personal finance is a field full of topics many of us would rather not think about. And of all the things to blissfully ignore, your own incapacity might top the list.
But wait you say, I thought we were going to talk about Estate Planning here... what's all this talk about incapacity?
Well, right. In my world of financial planning, we traditionally call this area estate planning. But I've found that most people see that title and think, "Right, well, I'm not a millionaire so that doesn't apply to me. Moving on to more important things like the latest episode of the Great British Bake Off."
So I call this Incapacity AND Estate planning in an effort to highlight that we talk about the important topic of incapacity. And incapacity is (in my view) is important to plan for regardless of how wealthy you are.
But if I'm being honest (and I do try to be honest), Estate Planning isn't a very descriptive term. What does estate even mean? Well... how to put this delicately. An estate is the legal entity that (temporarily) owns your assets after you die. So really we're talking about planning for your death.
A more accurate description might be
Incapacity & Death Planning.
Sorta rolls right of the tongue, that. Our culture doesn't do a great job of looking at death, so I'm gonna just stick to calling it estate planning. Close enough for government work. Either way, this is a difficult topic for many of us to think about. And one that is, quite frankly, often easier to avoid. Until of course it isn't.
But we're all here now. So let's talk about incapacity and death for a bit. Because like it or not, they are both important situations to think through when it comes to preparing for the future.
There are three different categories here:
- Planning for incapacity in your personal life;
- Planning for incapacity in your professional life; and
- Planning for your estate (ahem, planning for your death).
Personal Finance & Loving Kindness
I view incapacity and estate planning to be where the world of personal finance and loving kindness intersect.
I can't take credit for this way of looking at things, however. I was discussing putting a professional will in place with one of my first clients and I mentioned that this topic was perhaps not the most comfortable. "No, maybe not," she said, "but it strikes me as very loving thing to do." And I was like. Wow, yah. That's exactly it.
By planning for situations where you can't show up in the same way you do today, you extend loving kindness to your loved ones, your clients and your future self.
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Resources for Drafting Legal Documents
In each of the three sub-domains of Incapacity & Estate planning, important legal documents often can (or usually do) play a role. Which naturally begs the question - how should you go about getting that done.
You can always just sit down and draft your own legal document. You're an adult, and you're free to enter into any contract you want (including one you invent yourself). That said, I strongly encourage you to consider seeking professional assistance. And that assistance can come in two forms: legal services or engaging an attorney.
What I'm talking about here are online services like LegalZoom or Rocket Lawyer. And there are others as well. The services typically walk you through a questionnaire and then generate a legal document in response. You can then sign that document and away you go.
These services are great for the right circumstances. Because you don't typically actually speak with an actual live attorney, the documents may not end up being exactly perfect for you. But if you're drafting pretty simple documents, that's probably ok.
For example, I used LegalZoom to draft my LLC documents. My LLC didn't require much specialization and if something is wrong in those documents, honestly probably won't be the end of the world. Great time to use an online legal service.
Would I use LegalZoom or the like for my estate planning documents? I mean... probably not. If you're just setting up some powers of attorney (see below for details on what that is) and you're certain the boilerplate form for your state will be good enough, then an online legal service might be good enough. Still makes me a bit uncomfortable, tbh. And if you're drafting wills & trusts then I think working with an actual live human being (who is also a properly licensed attorney) is almost certainly the way to go.
Work with an Attorney
For incapacity and estate purposes, I typically think you should work with a real live qualified estate planning attorney. A standard estate planning package will put all the documents I discuss in this section in place. Such a package usually can be purchased for between $1,000 and $3,000. And if you don't need will and trust documents, you can probably find a good attorney do do incapacity planning documents for under $1,000. And investment? Sure. But I believe the peace of mind is worth it.
Hire a Specialized ESTATE Attorney
I also highly recommend that the actual live human being you work with be a specialized estate planning attorney well versed in the laws of the state you live in. Laws related to estate planning are complex and change frequently. Find a lawyer who eats, sleeps and breaths this stuff. Not one who occasionally dabbles in it.
I used Sonya Tatiyants and her all-woman team (pretty cool) at Lynk Law in Glendale, California to put my own estate plan in place. They were fantastic. They also have experience working with therapists and integrating a professional will into the overall estate plan. If you're in California, consider checking Lynk out.
To find other qualified attorneys focused on estate planning issues, a great place to start your search is the American College of Trust and Estate Counsel (ACTEC). I'd suggest you still do your due diligence on any attorney you find in this directory.
Personal Incapacity Planning
Personal Incapacity planning is put in place to handle your personal affairs in the event you suffer some form of incapacitation, such as illness or hospitalization.
Because there's a fair bit to cover here, I've placed these resources on a dedicated Personal Incapacity Planning Page.
Professional Incapacity Planning
Because you run your own private practice, your incapacity planning also extends into your professional life. There are two important pieces here, which work together: the professional will and the emergency response team (and associated documentation). See the section just below for a great book and other articles that will help you think through this process step-by-step.
Professional Incapacity Planning Tools
Click on the orange section headings to expand
This is anbalagous to your personal will (which I discuss in detail on the Estate Planning Page). A professional will stipulates what happens to your professional possessions (rather than your personal ones). For most of you, that means your private practice.
It's important to keep in mind that not just anyone can step in and mange your practice. In most cases, you'll need someone who holds similar licensure. This can get a bit complicated, so it can be a big help to work with an estate planning attorney who is familiar with planning for licensed professionals, or even specifically licensed mental health professionals.
That said, I'll repeat what I say about all elements of financial planning: even a small, partially thought out plan is infinitely better than no plan at all.
That said, to get started you don't even need to work with an attorney at all, you can just write down what you'd like to have happen to your professional assets. Unless you're looking to legally transfer ownership of your practice's financial assets, your primary concern here is that your clients receive continuity of care. And as long as there is some type of plan in place (regardless of whether you use an attorney or not), your clients should be in pretty good shape.
I will say that just having your professional will filed away in a drawer somewhere usually isn't going to be enough. You really want to have an emergency response plan and team in place, which is what I'll cover next.
This is analogous to the organization and documentation you put in place in your personal life, it's likely just a bit more formal. And where you have a few close family members or friends that will likely step in and be your personal emergency response team, for your private practice and your clients, you'll probably want a more formal emergency response team.
And I really do like the idea of having a team instead of a single colleague. If you have a full caseload, suddenly and unexpectedly transitioning responsibility for all those individuals to a single person would be a real burden. Having a team provides a way to share the workload among a group.
Another great reason to have an emergency response team, is that the members of that group can help facilitate and hold one another accountable for putting together the emergency response planning in the first place. This type of planning is a lot of work. And it can be overwhelming. You will likely run into questions and uncertainties along the way. Having a small group to work through it all together can be super helpful.
Private Practice Preparedness. This book provides a comprehensive overview of how to establish a continuity plan for your private practice, and also includes customizable forms.
CAMFT Private Practice Corner Page. The California Association of Marriage and Family Therapists offers several articles in the "Will Writing & Office Preparedness" section.
Ok, enough of incapacity planning, on to estate planning.
And since we're friends, let's just call this what it is: death planning. Specifically, I'm going to review how to ensure that after your death, any remaining assets you own are transferred efficiently and effectively.
To stay better organized (and I do love some good organization!), I've put this information on its very own: Estate Planning Page.
Need a break? Do it! 🧘♀️
And if you're still raring to go... 🚀
Let's take a look at what makes a Healthy Private Practice!
Standard Not Advice Disclaimer
Just a friendly reminder that none of the information included anywhere in this guide is financial, legal or accounting advice. I don't know the specific financial circumstances of your life (or your private practice), so there's no way I can make blanket statements about what's right for you.
What I offer in this Guide is a suggestion on how you might think things through and then decide (for yourself) what's right.
For some topics, I've also included what I've learned works well for most people. But you're not most people, you're you. You might be in that minority where the general suggestions are the wrong approach.
Take everything said here (and anywhere else online) with a grain of salt, and seek out professional advice if you suspect you need it. Of course, I'm always happy to have a no cost introductory conversation with you to see if I can help.
I know this sounds like a legal CYA (that's cover your ass) statement. And yah, it is that. AND it's also an extension of loving kindness to you, the reader.
The way I cover my ass here is by making sure I don't encourage you to do anything that ends up causing you harm. I don't want that for you, and you don't want that for you. Take your time, think things through, be deliberate and seek out professional advice if you suspect you need it.