If You’re Incapacitated, What Happens to Your DRS Pension and DCP?

Note: The examples and case studies in this article are hypothetical but represent real situations I have encountered in my practice working with Washington State public employees. This article provides general information about estate planning documents and is not legal advice. For specific guidance on your situation, consult with a qualified estate planning attorney.

Picture this scenario.

A husband suffers a massive stroke. He's a PERS 2 member with 28 years of service at the city. Not retired yet. Still working.

Now he's in intensive care, unable to speak or make decisions. And his wife has a problem.

She needs to access their retirement accounts to pay medical bills. But she can't. No power of attorney. No joint ownership on the DCP account. Nothing.

She could eventually apply for disability retirement on his behalf through DRS¹. But first she'd likely need to petition the court for guardianship to get the legal authority. In the meantime, she's stuck.

This is what happens to your money if you become incapacitated without the right documents in place.

Your DRS Pension Requires Legal Authority

DRS has a disability retirement process². But someone must apply on your behalf with legal authority to act for you.

Typically, your spouse would need either a power of attorney you set up beforehand, or court-appointed guardianship³.

The court process can take weeks or months with legal fees, court costs, and medical evaluations.

Your DCP Account Is Frozen Without a Power of Attorney

Your DCP account is in your name only⁴. If you haven't granted your spouse authority over retirement accounts in a durable power of attorney, they cannot access it. Not to withdraw. Not to change investments. Not even to check the balance.

The account sits there.

Your Bank Accounts Might Not Be Accessible Either

Joint accounts usually remain accessible⁵, but banks may freeze them once aware of incapacity. Individual accounts, old 401(k)s, IRAs, brokerage accounts? All frozen without a power of attorney.

The Documents That Actually Matter

Two documents can prevent this.

First, a durable power of attorney for financial matters⁶. This document names someone to manage your financial affairs if you become incapacitated. It typically covers bank accounts, retirement accounts, real estate, bills, taxes, and other financial matters.

"Durable" means it stays in effect during incapacity. There are two common types: an immediate durable power of attorney (effective when signed) or a springing power of attorney (effective only when a doctor certifies incapacity)⁶.

Many estate planning attorneys recommend immediate durable because springing powers can create delays.

Second, a healthcare power of attorney⁷. This document names someone to make medical decisions for you. It's separate from the financial power of attorney because healthcare and financial decisions are governed by different laws.

Most comprehensive estate plans include both documents.

What Actually Happens Without These Documents

Without powers of attorney, your spouse typically can't access your accounts. The bank, DRS, and your DCP provider will likely say the same thing: "We need legal authority."

The solution? Petition the court for guardianship⁸. The process takes weeks to months with hearings, medical evaluations, and legal fees.

Much of that process could be avoided with proper estate planning documents.

The Power of Attorney You Actually Need

From what I've seen working with clients, a durable power of attorney typically needs to explicitly grant authority to handle retirement accounts (DRS, DCP, IRAs, 401(k)s), access bank accounts, make tax decisions, manage real estate, and handle insurance policies⁹.

Some powers of attorney are too vague, and financial institutions may want to see explicit language granting authority over retirement accounts.

An estate planning attorney who understands Washington State law can help ensure your documents will be accepted by financial institutions.

What to Do Next

You're in your 50s. You're healthy. This isn't fun to think about.

But in my experience, the people who end up in crisis are often the ones who assumed they had more time. The people who have peace of mind are typically those who addressed these issues when they didn't need to.

If you don't have these documents, consider talking to an estate planning attorney in Washington State. Once you're incapacitated, it's too late to set these up.

If you have documents older than five years, it may be worth reviewing them with an attorney. Laws change. Your situation changes.

Your DRS pension and DCP account represent decades of work. Proper estate planning can help ensure they're accessible when needed.

​Sources

1. Washington State Department of Retirement Systems. "Disability Retirement." https://www.drs.wa.gov/life/disability/
2. Washington State Department of Retirement Systems. "PERS Plan 2 Member Handbook." https://www.drs.wa.gov/plan/pers2/
3. Washington Courts. "Guardianship." https://www.courts.wa.gov/content/publicUpload/guardianRules/reg400Complete.pdf#search=guardianship
4. Washington State Department of Retirement Systems. "Deferred Compensation Program." https://www.drs.wa.gov/dcp/
5. Federal Deposit Insurance Corporation. "Joint Accounts." https://www.fdic.gov/deposit/diguidebankers/documents/joint-accounts.pdf
6. Washington State Legislature. "RCW 11.125 - Uniform Power of Attorney Act." https://app.leg.wa.gov/rcw/default.aspx?cite=11.125
7. Washington State Legislature. "RCW 70.122 - Natural Death Act." https://app.leg.wa.gov/rcw/default.aspx?cite=70.122
8. Washington Courts. "Adult Guardianship Petition Process." https://www.courts.wa.gov/guardianship/FAQ.html
9. American Bar Association. "Power of Attorney." https://www.americanbar.org/groups/real_property_trust_estate/resources/estate_planning/power_of_attorney/​