Plan for incapacity in your estate plan

| Aug 15, 2014 | Estate Planning

As most fans of the Denver Nuggets are aware, the Donald Sterling debacle is finally over. The former owner of the Los Angeles Clippers was booted from the NBA and fined $2.5 million dollars. Sterling made some incredibly insensitive remarks to earn his banishment — but seemed to defy his reputation as courtroom frequenter when he gave his estranged wife, Shelly, clearance to sell the team. The Clippers were owned by the Sterling Family Trust.

However, when an acceptable bid finally came in for the team — a staggering offer of $2 billion from Steve Ballmer — Donald Sterling suddenly changed course. He revoked Shelly’s ability to sell the name under the family trust, and numerous court cases ensued. Donald Sterling lost these appeals, and Ballmer is now the official owner of the Los Angeles Clippers.

So why are we telling you this on a elder law blog? Well, this whole strange episode highlights an important aspect of estate planning: preparing for incapacity, should that occur.

Estate plans deal with the prospect of death and how assets should be divided in such a case. But rarely do they include specific language dealing with mental or physical incapacity of the individual. In the case of Donald Sterling, it turned out that he was in the early stages of Alzheimer’s, which was the reason Shelly was able to sell the team under the family trust without Donald’s approval.

It’s a difficult topic to discuss or even to imagine, but drawing up your estate plan with specifics regarding your potential incapacity could be very helpful down the line.

Source: Crain’s Wealth, “The lesson from Donald Sterling? Plan for incapacity,” Darla Mercado, Aug. 5, 2014