Perhaps more important than probate avoidance and avoidance of government bureaucracy at death, is avoidance of government intrusion into your privacy during your lifetime because you experience a period of mental incapacity. We generally tell our clients that incapacity is guaranteed, it is the duration of the incapacity that is unknown. Dealing with assets, even some that are jointly owned, or making medical decisions, even if a spouse is alive, are often impossible to undertake if you become mentally incapacitated. If you should become incapacitated, a court petition to appoint a guardian is usually necessary to make critical decisions. Furthermore, tax planning opportunities can forever be lost after you have become incapacitated.

Guardianships generally require that the appointed guardian receive education and training. This can be required whether or not your nominated guardian is a family member, such as a spouse or child. Your guardian must file an inventory of all of your assets and must annually file an accounting and various reports. Generally, you and your guardian are represented by attorneys. The purposes of the inventory and reports are to permit the court to monitor how the guardian is taking care of you and to ensure that your assets are being properly managed. Guardianship processes are often more expensive than the costs of probate administration because a guardianship can go on for years.

An estate plan should contemplate the possibility, if not probability, of incapacity. Avoidance of guardianship processes is often easily accomplished with a well-prepared estate plan. Many estate plans, however, fail to contemplate the possibility that the overall estate plan will not have been fully completed or implemented by the time of a senior family member's incapacity and subsequent death. Failure to provide for flexibility and preservation of planning opportunities if an incapacity occurs, even if an otherwise adequate estate plan exists, can cause substantial cost, family disharmony, and an inability to reduce estate or death taxes.