Decades of contributing to a 401(k), rolling over old retirement accounts, and staying invested through years of market volatility can build a nest egg that reflects a lifetime of work. Many savers have carefully planned how those assets will be distributed after death.
However, some may not have prepared for a different possibility: remaining alive but becoming unable to make financial decisions independently.
Vanguard’s incapacity planning guide spotlights a critical gap most Americans ignore entirely when building their financial plans.
The investment firm warns that without specific legal documents signed and on file, a sudden stroke or onset of cognitive decline could leave retirement accounts effectively frozen.
Family members may even have to seek court approval before accessing savings intended to support the account holder, according to the guide.
A spouse may have no legal authority over one’s retirement accounts
Vanguard states in its incapacity planning guide that a spouse cannot automatically make financial or medical decisions for an incapacitated partner.
Even after decades of marriage, a spouse may lack the legal right to access the partner’s brokerage accounts or pay bills without the right paperwork.
Without a durable power of attorney already on file, banks and brokerages have no obligation to honor a spouse’s requests for account access.
The legal default leaves families scrambling at the exact moment when quick financial decisions matter most, and court intervention becomes the only alternative.
Don D. Ford, a board-certified probate and estate attorney and managing partner of Ford+Bergner LLP, confirmed this gap in a Florida Villager article by contributor Merilee Kern.
“Without the proper legal documents already in place, even a spouse or adult child may have no legal authority to step in and help, regardless of how obvious the need appears or how close the relationship is,” Ford said.
Cognitive decline affects millions, and the financial toll keeps climbing
The need for this kind of planning is not a concern for a small slice of the population, because the numbers say otherwise.
About 7.4 million Americans aged 65 and older are living with Alzheimer’s dementia in 2026, the Alzheimer’s Association reported in its 2026 Alzheimer’s Disease Facts and Figures report.
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Care costs for people with dementia are projected to reach $409 billion in 2026, and the Association measures lifetime risk beginning at age 45.
From age 45, women face a one-in-five chance, and men face a one-in-10 chance of developing Alzheimer’s over their remaining lifetimes, according to the 2026 Alzheimer’s Disease Facts and Figures report.
Cognitive decline is not the only event that can strip away decision-making ability and leave finances exposed to legal limbo.
More than 795,000 Americans suffer a stroke every year, and it remains a leading cause of long-term disability, the Centers for Disease Control and Prevention reported.
“The window to complete these documents can close much faster than people expect,” Ford noted. “Once someone no longer has legal capacity, the planning options become far more limited.”
What Vanguard wants investors to know about incapacity planning
Vanguard’s guide outlines several legal tools that work together to protect finances and medical care if decision-making ability is lost.
About 56% of adults have no formal estate planning documents at all, the 2026 Trust & Will Estate Planning Report found.
Vanguard‘s guide stresses that every one of these documents must be signed while an individual still has cognitive and physical capacity.
State laws governing these tools vary, so the documents must comply with the specific requirements in the jurisdiction where they are executed, Vanguard’s guide states.
Families without a plan could face guardianship court proceedings
When no incapacity documents exist, the legal fallback is court-supervised guardianship, a process where a judge appoints someone to control one’s financial and medical decisions.
John Samuels, Founder and CEO of Wellworth healthcare advisory firm, wrote in Forbes that the financial damage from poor incapacity planning extends far beyond the person receiving care, disrupting entire families.
A prolonged period of diminished decision-making capacity can create family conflict, caregiver burnout and unnecessary healthcare spending. The financial impact extends beyond the person receiving care
Ford described guardianship as one of the most time-consuming, expensive, and emotionally difficult proceedings a family can face in the Florida Villager interview.
The process can take months, generate substantial legal fees, and impose ongoing court oversight on every dollar spent on the incapacitated person’s behalf.
A court-appointed guardian may not be the person you would have chosen, and family conflict over who takes the role often compounds the damage.
“Incapacity planning allows you to decide in advance who will speak for you if you cannot speak for yourself,” Ford said.
What to review in an existing incapacity plan
Ford emphasized that creating these documents is only the first step, as major life events and changing circumstances can make existing plans outdated.
He recommended revisiting incapacity documents after events like marriage, divorce, or a move to a new state, since each state imposes its legal requirements.
Vanguard’s guide reinforces that message, urging investors to confirm that beneficiary designations on retirement accounts align with their overall estate plan.
Documents prepared years earlier may no longer reflect an individual’s wishes or provide the intended protection if personal, financial, or family situations have changed over time.
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