Physical illnesses are a common trigger for people to think about estate planning, but mental illness should also be. About one in five American adults experience mental illness each year. The pandemic has uncovered many of the flaws in our healthcare system. Hopefully, a better understanding of mental health will remove stigmas that prevent people from seeking the help they need.
The goal of estate planning is to provide for your loved ones when you can no longer do so. Thinking about the challenges associated with living with mental illness can help you be proactive in your estate planning, so family members with mental illness will be able to care for themselves throughout their lifetime. And, while this is an important consideration, caring for yourself if you ever reach a point where you cannot make decisions for yourself is also essential.
Mental Health in the U.S.
Understanding how many people in the U.S. are affected by mental illness can better define the scope of its physical, social, and financial implications and provide assurance that no one living with or caring for someone with a mental illness is alone. The odds are good that anyone reading this article is either living with a mental health condition or caring for someone who is.
According to the National Alliance on Mental Illness, about 1 in 20 U.S. adults experience a serious mental illness each year. In addition, three-quarters of all people who will eventually be diagnosed with mental illness are diagnosed by age 24.
The mental health crisis in the U.S. worsened during the pandemic. According to the Kettering Family Foundation (KFF), there were multiple contributing factors, including:
- Decreased access to health care
- Loneliness and isolation
- Difficulty sleeping or eating
- Increases in alcohol consumption and substance use
- University closures
- Income loss
About three-quarters of Americans recognize and understand that mental health is as important to their well-being as physical health. However, mental health services in the U.S. are insufficient, despite only half of Americans that need mental health services seeking help.
Even with the growing awareness of the importance of mental health, about three-quarters of Americans surveyed did not believe mental health services are accessible to those who need them, and about half believed that mental health treatment options are limited.
Meeting Your Mental Health Needs with an Estate Plan
While recognizing the mental health crisis in America is important, meeting your family’s needs with your estate plan is equally so. Several estate planning documents are available to address concerns about caring for family members with mental illness or caring for yourself if you can no longer do so.
Financial Power of Attorney
A financial power of attorney allows you to appoint someone to manage your financial affairs on your behalf. State laws may vary, but the document may take effect immediately or only as a response to a trigger, such as mental incapacitation. By completing a financial power of attorney, you can assign your agent the power to complete financial tasks for you, such as managing your bank accounts or signing a document on your behalf.
Medical Power of Attorney
A medical power of attorney is a trusted person who is given the legal authority to make healthcare decisions on your behalf when you can’t. The authority to make decisions can be limited in scope.
Revocable Living Trust
A revocable living trust is a trust you create and then transfer your money and property into. A trustee, frequently yourself (and perhaps your spouse), manages the trust. You can also appoint succeeding trustees or co-trustees to manage it for you. Your revocable living trust is frequently designed so you can change or revoke it throughout your lifetime, as long as you have the mental ability to do so. A revocable living trust document can also specify how you would like to distribute your money and property when you die.
It is very important to be proactive when making your estate plans. None of these documents will carry any legal authority unless you have the mental capacity to sign them. Unfortunately, contesting an estate plan by alleging a lack of capacity is common. One way to mitigate this is to seek a professional opinion on your mental health from a licensed mental health provider. This person would attest that you are of sound mind and understand the meaning and effect of the documents you are signing.
The same care should be taken for considering any mental health concerns you may have about people you have appointed as your power of attorney or trustee.
Meeting Your Beneficiaries’ Mental Health Needs with an Estate Plan
With most mental illnesses diagnosed in people under age 24, many parents wrestle with how to care for their children throughout their lifetime. Discretionary trusts and supplemental trusts are potential options to pass on your legacy in a way that meets your families’ needs.
A discretionary trust is a tool that allows a trustee, chosen by you, to determine how to spend the money in a trust. This can be a useful option if you are concerned that a beneficiary’s mental illness will prevent them from spending their inheritance wisely. A trustee can ensure that the money and property in the trust are used to meet the beneficiary’s needs. This type of trust is suitable for someone who does not receive public assistance or plan to receive it.
Third-party special needs trusts are also set up with a trustee who makes distributions based on the beneficiary’s needs. However, the money and property in this trust do not go directly to the beneficiary. Instead, the money is used to pay for certain supplemental needs, such as personal care, therapy, and education, in a way that does not disqualify the beneficiary from becoming eligible for or receiving needs-based government benefits.
The needs of people with mental illness vary because there is a wide range of severity of mental illness. There is also the potential for mental illness to be episodic, prolonged, or recurrent in nature. Regardless of your needs, meeting with your estate planning attorney can help you plan for the future. Your estate plan can reflect what you currently know about the mental health needs of your family members and be updated to reflect additional needs or changes in your family’s circumstances.