Estate Planning After a Serious Injury
After a traumatic event like a car accident, fall, or other medical emergency, an estate plan is probably the last thing on your mind. Understandably, dealing with a serious injury usually takes priority.
But those dire initial moments can suddenly change your ability to make decisions, take care of yourself, or manage your finances. Many people think estate planning only matters after death. Still, it can also protect you while you’re alive in the event you’re incapacitated. That’s why it’s important to understand how estate planning after a serious injury can have an impact on your future.
Whether you’re in San Antonio or elsewhere in Texas, we outline a few tools that can help protect your rights, wishes, and loved ones should things go wrong.
A serious injury can reshape your legal and financial life
It takes seconds for your life to get completely turned around. When someone suffers a serious injury, their health isn’t the only thing impacted. A serious injury can lead to:
- Mental or physical incapacity, which may affect decision-making ability
- Ongoing medical and rehabilitation costs
- Inability to manage assets
- Personal wishes (medical, financial, family, and more) are being ignored if you’re unable to communicate them
These shifts necessitate the creation or updating of an estate plan in consideration of new realities triggered by incapacity.
What is estate planning?
Estate planning is organizing how your assets, healthcare decisions, and financial matters will be managed during your life and after your death. Standard tools used to carry out directives include wills, trusts, and powers of attorney (POA). These legally binding documents guide who will make decisions for you, how your property will be handled, and what medical care you receive.
Legal documents to have after a serious injury
There are a few fundamental legal instruments that you should consider including in your estate plan. These documents can help protect your interests and provide clarity for your loved ones during a difficult time.
Medical power of attorney and advance healthcare directives
If you want to authorize someone to make medical decisions, consider a Medical Power of Attorney and a Directive to Physicians (‘living will’). An Out-of-Hospital DNR is a physician’s order issued under specific statutory requirements and applies outside hospital settings.
Taking these steps now empowers you to maintain control over your medical care in the future.
Durable power of attorney
A durable power of attorney (DPOA) allows you to designate someone, referred to as an “agent” or “attorney-in-fact,” to handle your financial affairs if you can’t. Since this POA is durable, it’ll remain effective even if you become incapacitated. Your agent can have the authority to pay bills, manage bank or investment accounts, handle insurance claims, and perform other financial tasks.
The Texas Estates Code outlines the requirements for a valid DPOA. When drafting, it’s essential to specify what powers your agent has, as tasks vary in weight. For example, there’s a significant difference in your agent being able to pay a student loan and being able to mortgage your home. If your DPOA doesn’t include clear, explicit language, somebody may question or even challenge your agent’s authority.
Revocable (living) trusts
A revocable trust can be changed or revoked as long as you’re competent. When adequately funded by retitling your assets, such as a home, bank accounts, or investments, into a trust, it offers unique benefits:
- A successor trustee can step in and manage assets during your incapacity
- It avoids or reduces the need for probate, saving time and money
- A revocable trust keeps details private because they’re typically confidential, unlike wills, which become public through probate
Visit the Texas Trust Code to find out more about how trusts are governed in the state.
Irrevocable trusts and protections
To qualify for specific benefit programs or to protect certain assets from future creditors, an irrevocable trust may be a good option. For instance, this type of trust can help protect assets from Medicaid’s “spend-down” rules (which vary by state, like trusts). In essence, transferring assets into a trust means that the trust, rather than the person, owns the assets. However, only certain structures (e.g., Qualified Income Trusts, some exception trusts) get special treatment—seek specialized counsel.
Unlike a revocable trust, this can’t be easily changed or revoked, but it does offer stronger protection. An irrevocable trust may be especially beneficial for serious injury victims, as long-term care and/or significant medical expenses are likely anticipated.
How personal injury overlaps with estate planning
If you have a personal injury claim for damages, the proceeds from that claim will become part of your assets. To properly manage these funds, it’s important to have appropriate structures that can receive and hold the settlement or award.
Appointed agents must have the authority to accept and manage these funds. Sometimes, they may need to negotiate or resolve disputes on your behalf. If you don’t have the right legal papers and you sustain a serious injury, you could wind up in a court-appointed guardianship. These proceedings are often expensive, time-consuming, and open to the public. They could make you lose control over your own affairs.
Take a look at this example:
A motorcycle accident leaves John gravely injured and unable to take care of his business. John’s estate plans, put in place before his accident, allow his family to act quickly. His DPOA authorizes his sister to pay bills, monitor bank accounts, and communicate with insurance companies. At the same time, his medical POA allows his sister to speak with doctors and make medical decisions while John is recovering.
In addition to the two POAs, John has a revocable living trust that holds his home and investment accounts. Since his sister is listed as the successor trustee, there’s no need for the court administration. Together, the trust and POAs work to ensure both John’s needs and wants are handled smoothly and quickly without the delays and complications that often come with court involvement.
Begin your estate planning process
The Texas State Law Library’s Estate Planning & Probate Guide has more information about estate planning tools and rules. The official guide provides a detailed and helpful summary of relevant laws, forms, and legal concepts. This resource is just the beginning. A good place to start, but a starting point, nonetheless. The Estate Planning & Probate Guide is not a substitute for personalized legal advice.
Talk to a Texas attorney about your estate plan
Be mindful that Texas estate, probate, and Medicaid laws have specific requirements and can be nuanced. Therefore, it’s essential to consult a local attorney to ensure your documents are valid and enforceable.
Whether you or a loved one has been seriously injured and is concerned about what happens next, it’s wise to review or begin estate planning now. Our dedicated team, based in San Antonio, works to help clients coordinate personal injury recovery with effective estate planning tools to help protect their medical, financial, and personal wishes.
Contact us today for a consultation. We work to help you understand what estate planning documents you need, how your injury settlement may fit in, and how to tailor your plan as a Texan.