Special Planning Considerations for Alzheimer’s and Dementia

POSTED ON: December 20, 2021

If you receive an Alzheimer’s or dementia diagnosis, planning for the future must begin as soon as possible. Preparing for incapacity must be done while you still have legal capacity: the ability to express your own wishes and understand the implications of documents that are created to enforce…

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Special Planning Considerations for Alzheimer’s and Dementia

If you receive an Alzheimer’s or dementia diagnosis, planning for the future must begin as soon as possible.

First, preparing for incapacity must be done while you still have legal capacity: the ability to express your own wishes and understand the implications of documents that are created to enforce and protect them. Once you become incapacitated, you may not sign legal documents. In the absence of proper incapacity legal planning in advance, a court process will then be required to appoint financial and health care decision-makers for you. This process, called “interdiction” (“guardianship” in other states), is lengthy and expensive. Not only is it expensive, the process usually causes delays in proper Medicaid planning.  This is a waste of precious time.  Each month of delay can cost you an additional month of nursing home costs that can be saved.  For example, if interdiction costs $5,000, and the interdiction process takes three months, and the nursing home costs $6,000 per month, the simple act of not having a property Power of Attorney in place can easily cost your estate $23,000 ($5,000 + $6,000 + $6,000 + $6,000).  It also will expose your private personal, health and financial circumstances to the public record.  The interdiction process requires your family to hire not one, but two lawyers!  The first lawyer for your family member wishing to interdict you, and a second to be appointed by the court.  Interdiction can be avoided by you signing a Power of Attorney (POA).

Second, keep in mind that often Alzheimer’s and dementia patients often wind up in a nursing home, certainly not because this is what the family wishes, but becasue the family of the patient often are unable to provide the kind of intense around-the-clock care for the patient.  The wealth that you have created over a lifetime can easily go to pay a nursing home or sitters.  Nursing home expenses can easily run $6,500 per month, or $78,000 per year.  Just a couple of years in a nursing home have wrecked the finances of many families.  This can often be avoided if you plan ahead with a good elder law attorney.

What Documents are Needed for a Person with Dementia?

Through a general durable power of attorney (POA) you can appoint a trusted individual as the agent (also known as the attorney in fact) to manage your financial and legal matters. While a POA can give limited powers, in cases of Alzheimer’s or dementia, broader powers should be given to the agent. Why? Your appointed agent will most likely need such authority to conduct all and any financial and legal matters on your behalf. A complete list of all assets, including bank accounts, pension and retirement plans, investment accounts, real property and digital assets should be created and provided to the agent appointed under your POA.

If you have executed a last will and testament, then it should be reviewed without delay. Make sure that it still reflects your wishes, especially when it comes to the executor you have appointed and to the distributions you want made to your beneficiaries. If you have any minor children, you should also make sure that the guardians you have nominated are still willing to serve.

What Healthcare-Focused Documents Should Be Prepared?

While executing your POA, remember to execute a healthcare power of attorney as the agent. The individual who you appoint as the agent will be authorized to make your fundamental health care decisions if you are incapacitated. The same individual is sometimes appointed to serve as agent for financial and health care decisions. However, this is not always the case. Each situation is different. You know the strengths (and weaknesses) of the pool of candidates for these important roles.  For example, you can appoint your daughter that is the nurse to act as your healthcare power of attorney, and you can appoint your son that is the accountant to act as your financial power of attorney.

As part of your healthcare power of attorney, you should execute a HIPAA release form, so doctors and attorneys may speak with your financial and health care agents, family members and caregivers as issues arise. In addition, those you authorize will also be able to obtain access to your medical records. This access is essential and is very practical for uses ranging from obtaining second opinions to pursuing potential malpractice claims. The HIPPA release form is also needed to interface with the health insurance provider. The right to speak with medical providers based on being a spouse or descendent should not be assumed.

Trusts are Commonly Used to Manage Assets for Incapacity Planning

You can create a fully-funded trust to address the management of your assets while you are living and to qualify for Medicaid.  There may be a certain penalty period that applies.  So the sooner you transfer your assets the better.  Your trust can also provide for the distribution of your assets postmortem according to your instructions. As long as you have capacity, you are in charge as the original trust as the trustee.  Depending on the trust, you can often make any changes you desire. And a trust also avoids probate, making your plan able to pay for itself.  The successor trustee you appoint can be the same person appointed as the agent under your POA, the executor under your last will and even your health care agent.

Planning for Final Arrangements

It is wise to discuss whether you want to be buried or cremated. You should also provide guidance regarding what, if any, kind of funeral service you would like and any other related arrangements. The more decisions you can make now, the fewer your loved ones will need to decide later on when grieving your loss.

Incapacity Planning for Alzheimer’s or Dementia

Planning for incapacity can be part of the process of coming to terms with an Alzheimer’s or dementia diagnosis, both for you and your loved ones. Memorializing your wishes helps keep you in control of the process, since your wishes are expressed and documented. You and your loved ones will be empowered to move forward with a plan in place.

I know that the prospect of having an Alzheimer’s or dementia diagnosis can be a horrible prospect for a client and their loved ones.  But with the proper plan in place, tailored to your needs, you can approach the future knowing that you have done everything in your power to protect your hard earned assets and make the transition as easy as it can be for your family.

To learn more, read these articles on Alzheimer’s, dementia and Medicaid planning: How are Alzheimer’s and Dementia Different? and How to Protect Assets from Medicaid Spend Down? and Can I Keep Assets and Still Be Eligible for Medicaid?

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