Estate Planning for Unexpected Mental Health Crisis

The head of a man with a heart inside on a light background signifying Mental Health Awareness Month

This Mental Health Awareness Month, take the first step in proactively planning ahead for situations that may arise if you or a loved one suffers from any mental incapacity. Ensuring you or your loved one’s needs are met and interests protected may seem insurmountable, but proper estate planning can alleviate that stress.

What is Mental Incapacity?

Mental Incapacity can take many forms and detecting it is not always straightforward. Legal Mental Incapacity refers to a person’s inability to understand and appreciate the nature and consequences of their decisions or the inability to communicate those decisions. Incapacity can be mental, physical, developmental, or even temporary. Some examples include individuals suffering from Parkinson’s disease, Alzheimer’s, bi-polar disorder, and substance abuse issues. Memory loss, confusion, inattention, poor judgment, hallucinations or delusions, or difficulty performing familiar tasks can be indicators of Mental Incapacity. However, without an official diagnosis it may be difficult to discern one-off behavior from signs of illness. Therefore, it is important not to draw conclusions and instead take careful record of instances to assist the medical expert in their examination.

What is the Process for Determining Mental Incapacity?

If you suspect that you or a loved one may be Mentally Ill, check your local laws for the determination process. Determining Mental Incapacity in Florida will usually involve both a medical and legal process. The first step is to contact a medical professional such as psychiatrists or psychologists to conduct a comprehensive evaluation of the person’s mental state. Using this evaluation as well as other medical tests and records, a court of law will ultimately determine whether the person is mentally capable or not.

In Florida, concerned family or friends may alternatively initiate this process by petitioning the court for a determination of mental incapacity or by seeking an involuntary commitment under the Florida Mental Health Act (Baker Act).

Once an individual has been declared Mentally Incapacitated it is important to take the correct measures in order to support their new circumstances. Establishment of a guardianship or conservatorship can help ensure an individual has sufficient supervision regarding significant decisions. A guardianship is the appointment of a legal guardian which maintains the right to make financial and medical decisions on behalf of an incapacitated individual. A guardian is responsible for a broad range of decisions, such as asset management, paying bills, filing taxes, medical decisions, and managing a Special Needs Trust (SNT). Furthermore, in Florida there are different types of guardianships, including guardian advocacy, guardian of the person, guardian of the property, guardian of the person and property and other specificities. The difficulty in identifying which option is most suitable is best resolved with the assistance of expert legal counsel.

What Estate Planning Actions Should I Take?

Two of the most effective options to prepare for mentally incapacitated individuals are Living Wills and Advanced Directives. These are written, legal instructions which specify the beneficiary’s wishes regarding financial decisions and medical preferences in the event that they can no longer communicate their decisions. Advanced Directives can cover a broad range of objectives, a few of the most common ones are:

  • Durable Power of Attorney: Authorizes another individual to act on one’s behalf in respect to financial, legal, or health matters. Unlike standard Power of Attorney, a Durable Power of Attorney does not become invalid if the grantor of authority becomes incapacitated, thus “durable.”
  • Designation of Healthcare Surrogate: Allows an individual to appoint another person to make healthcare decisions on their behalf in the event they became unable to do so themselves. The scope of these decisions includes medical treatments, surgical procedures, and end-of-life care.
  • Designation of Preened Guardian: Allows an individual to specify, in advance, who they wish to be their guardian in the event that they become incapacitated. This proactive measure guarantees that an individual’s preferences are honored and prevents conflict or confusion among family members.

With the assistance of counsel, these documents can be accurately crafted and tailored to the beneficiary’s unique requests.

In many cases, individuals suffering from incapacity are unable to generate income or manage assets. Under those circumstances, it may be beneficial to establish a Special Needs Trust (SNT). A SNT allows the incapacitated person to have assets held by a trustee without disqualifying them from government benefits such as Medicaid and Supplement Security Income (SSI). There are two primary types of SNTs: Third Party SNTs and First Party SNTs.

  • Third Party SNTs are typically established by an inheritance left by a parent or grandparent for the benefit of a disabled beneficiary. Standard Third Party SNTs allow generic asset allocation for a beneficiary receiving government benefits. ABLE Accounts are a different type of Third Party SNTs that allow a family member to gift funds under certain rules.
  • First Party SNTs or Pay Back Trusts are established using a disabled persons own funds or from an award received through settlement from a personal injury or medical malpractice case. The most significant differentiator for First Party SNTs is their Medicaid Payback Provision which allocates remaining assets in the trust towards reimbursing Medicaid liens.

Proper trust configuration can assure that a beneficiary properly retains assets allocated for them. However, additional provisions are often necessary to protect beneficiaries from creditors and their own financial mismanagement. “Spendthrift Provisions,” often included in a trust or will, restrict a beneficiary’s ability to transfer or pledge their interest in the trust to creditors. Spendthrift Provisions help preserve a beneficiary’s financial stability by creating safeguards on their spending habits as intended by the grantor. It can also serve to ward off creditors looking to reach the trust’s assets in order to satisfy outstanding debts.

If you have questions about how unexpected mental health incapacities can affect your estate plan, please feel free to reach out to our office and schedule a consultation with one of our Trusts and Estates attorneys.  

EPGD Business Law is located in beautiful Coral Gables. Call us at (786) 837-6787, or contact us through the website to schedule a consultation.

*Disclaimer: this blog post is not intended to be legal advice. We highly recommend speaking to an attorney if you have any legal concerns. Contacting us through our website does not establish an attorney-client relationship.*

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Kathrine Karimi


*The following comments are not intended to be treated as legal advice. The answer to your question is limited to the basic facts presented. Additional details may heavily alter our assessment and change the answer provided. For a more thorough review of your question please contact our office for a consultation.



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