With Alzheimer’s, or another disease which causes dementia, estate planning takes on a new level of both urgency and complexity. For many families, it can feel like time is running out to ensure your loved one is taken care of well through the end of their life, and that their wishes will be honored once they’ve passed.
The good news is that whether they’ve received an early or late-stage diagnosis, it’s not too late to get their estate plan in order and help everyone feel confident in the ability to carry out their wishes.
The Opportunity to Plan Ahead
With an early-onset diagnosis, you have the opportunity to plan for the future while your loved one still can make decisions and clearly express their wishes.
It can be tricky to have a conversation at this stage. It may be awkward. The person with the diagnosis or other family members may be in denial, and it can be emotionally exhausting to deal with. But pushing through and making important decisions at this time is critical to ensuring there’s a safety net in place for when the affected family member is unable to to make decisions on their own.
What Legal Capacity Means
Legal capacity is an individual’s ability to understand the meaning and consequences of a legal decision. And just like a person’s soundness of mind while dealing with Alzheimer’s or dementia, it comes and goes. This means that rather than a one-time event, legal capacity is evaluated at the time of a legal action. Legal capacity also varies depending on the decision that needs to be made or the document that needs to be signed. A person may not have the capacity to agree to sell a house but may be able to sign a power of attorney.
With a power of attorney in place, it’s important to know that the individual still has the right to make their own decisions if they have the legal capacity. A power of attorney gives someone else the ability to make decisions on their behalf, not instead of them. It’s a common misconception.
Your attorney can help you determine what level of capacity is needed for a document, as the understanding necessary for a given document can vary. A medical professional can help evaluate your loved one and determine their mental capacity. And you and your family, who know the individual best, can help evaluate how they are doing based on their day-to-day functioning.
Documents You Need in Place
Every estate plan is unique, but there are basic documents that every plan needs. Make sure to review all of your options with your attorney while putting it all together.
— Power of Attorney Documents
Power of attorney (POA) documents become critical with a dementia diagnosis. A power of attorney allows an individual to appoint someone they trust with the ability to make financial or healthcare decisions for them. Your loved one must have these documents so that once they are no longer able to make their own decisions, a trusted person can step in on their behalf.
There are two kinds of POAs:
1. Financial Power of Attorney
This POA gives broad control over decisions regarding finances and property. Some refer to this as a “durable” power of attorney. “Durable” simply means that the powers continue even if the person giving the authority is incapacitated. Without this document, no one would have the ability to take even simple financial actions like paying bills without going through a court, which can be costly, time-consuming, and still not turn out favorably for the family.
Some of the decisions they can make include those related to:
- Selling and buying real estate
- Large expenses
- Use of income
- What to do with owned assets
- Maintaining financial records
- Filing and paying taxes
2. Healthcare Power of Attorney
This POA operates the same as the financial POA, allowing someone else authority over medical decisions, such as selecting doctors, choosing treatments, or end-of-life decisions.
— Living Will
While your loved one is still able to do so, it’s important to have the conversation around end-of-life choices – as difficult as it can be. A living will allows a person to make certain decisions about their end-of-life care for when they’re unable to make those decisions themselves. In South Carolina, the living will is a statutory document. You may also wish to use another document, such as a Five Wishes declaration or a Physician’s Order on Scope of Treatment (POST) form, to make things as clear as possible for your family and medical providers depending on what documents are valid in your state.
— Last Will and Testament
A last will and testament establishes how the person wants their estate and assets to be distributed after death. It appoints a personal representative/executor (the person responsible for managing the estate) and names beneficiaries (the ones receiving the assets). A will can also specify how children and/or pets will be cared for and funeral/burial arrangements. In many cases, it will point to a trust, which will manage the estate rather than stating everything in the will itself.
— Living Trust
A trust can be a more powerful tool than a will because it allows a trustee to manage the estate both during life and after death without the need to go through probate. The trustee can be the individual as long as they are alive and have the capacity, with a substitute stepping up to manage the trust if they cannot. There are many options when it comes to establishing a trust, and when carefully drafted, a trust can protect and manage assets during many stages of a person’s life.
A trust allows for your loved one to be taken care of once they are no longer able to manage their finances, can be flexible if the healthier spouse or trustee becomes ill or can’t manage the trust anymore, and can distribute the assets after death. It’s an essential tool for those with dementia or Alzheimer’s, as it both protects and directs the assets within the estate.
— Planning for Life Ahead
The documents mentioned are the essential tools for creating an effective estate plan. But it’s how these tools are wielded, and the strategies considered, that constitute real estate planning.
For instance, an effective estate plan should take into consideration the possibility of long-term care. Every situation is unique and you should look at whether it makes sense in your situation to take action to protect assets from being depleted by costly long-term care if required in the future.
It’s also important to consider how the estate plan will affect the primary caregiver, often the healthier spouse. Caregiver burnout is real, and the caregiver’s quality of life is all too common a casualty in the effort to take care of the one affected by dementia or Alzheimer’s. Strategic estate planning takes into account not just the afflicted, but those caring for them, and the entire system of support.
Getting organized and making sure all of the necessary information such as passwords, locations of documents and contact information for advisors is accessible to your family is an important part of putting the plan in place. Particularly with a diagnosis of dementia or Alzheimer’s, it is important to ask these questions and get this information secured to make life easier for caregivers in the future.
If the disease has progressed far enough that they’re unable to make decisions on their own, you can step in for them under a healthcare power of attorney. In that case, the family can get together to decide what that family member would want, and how to best take care of them as they believe they would want. It’s still an opportunity to make many important decisions before they happen, and you ensure their wishes are carried out with fewer complications and family disagreements after death.
