Estate Planning Essentials for Caregivers of Individuals with Dementia - Part 1

Navigating the care of a family member with dementia is a journey embarked upon by millions annually. As a caregiver, grasping the impact of a dementia diagnosis on your loved one's capacity for legal decision-making is essential. This understanding is key to honoring their preferences and providing optimal care. This blog will highlight the critical role of estate planning, even post-dementia diagnosis, as the most effective way to safeguard the wishes and rights of your loved one.

What is Incapacity?

Dementia progressively impairs memory, cognitive function, and daily activities. As it progresses, your loved one may lose the ability to make informed decisions regarding their finances, health care, and overall welfare. When dementia hinders someone's ability to comprehend information and make reasoned choices, they are legally deemed incapacitated, meaning they can no longer make decisions about their healthcare or finances on their own. This decline in cognitive ability can be emotionally taxing for both the individual and their family, and without adequate preparation, it may necessitate court intervention.

However, there is a silver lining. Proactive estate planning can ensure that your loved one receives care from trusted individuals if self-care becomes unmanageable. Importantly, even after a dementia diagnosis, it's possible to establish a legally valid estate plan during the disease's early stages, securing their well-being and honoring their wishes.

Estate Planning During Early Stages of Dementia

Every adult, including those with a dementia diagnosis, should establish legal documents to safeguard their rights and desires. It's crucial to understand that to legally create these documents, one must possess mental capacity – that is, a clear understanding of the actions they are taking and the implications of their decisions.

Fortunately, it's not necessary for an individual to be in a constant state of mental capacity to formulate an estate plan. The key is that your loved one must be mentally capable at the exact time of signing their estate planning documents. These documents remain valid even if the individual later experiences a decline in mental capacity.

Ideally, and preferably before any health issues arise, individuals in the early stages of dementia should prepare the following essential estate planning documents:

General Durable Power of Attorney

A General Durable Power of Attorney (POA) is a legal instrument enabling your loved one to nominate someone to handle their financial and legal matters. This appointed person gains the authority to conduct tasks such as writing checks, paying bills, maintaining the home, and managing financial assets.

The significance of this document grows as dementia advances. It's advisable to urge your loved one to choose a reliable person as their Power of Attorney while they still have the capacity to make informed decisions.

A Revocable Living Trust

While a General Durable Power of Attorney is essential, it's worth noting that some financial institutions impose limitations on a POA's use or may not recognize its authority entirely. To ensure the full protection of your loved one's financial wishes, it's beneficial to advise them to set up a Revocable Living Trust and transfer their assets into the trust's name.

In establishing a Trust, your loved one will appoint a Trustee, who is responsible for managing their assets. Often, the Trustee and the Power of Attorney are the same individual, although this isn't always the case. Having both a Trust and a Power of Attorney in place provides confidence that the individuals your loved one knows and trusts will be able to handle their assets effectively as their dementia progresses.

Healthcare Power of Attorney

A Power of Attorney for Healthcare (HPOA) functions similarly to a General Durable POA, but specifically designates someone to make healthcare-related decisions for your loved one if they become incapable of doing so themselves. Initiating discussions and formalizing a Healthcare Power of Attorney early allows your loved one to communicate their medical preferences, ensuring their wishes are followed.

It's also important for the Healthcare Power of Attorney to include a Declaration to Physicians, commonly known as a Living Will. This declaration specifies their preferences regarding medical treatments, life support, and end-of-life care. By creating a Declaration to Physicians and discussing these preferences openly, you can ensure that their choices about life-sustaining treatments, resuscitation, and other medical interventions are both documented and honored.

Act Early in the Planning Process

A critical step in managing the challenges posed by dementia involves assisting your loved one in finalizing their estate planning while they still possess the mental capacity to make such decisions. Delaying this process until the dementia progresses can restrict their choices and add unnecessary stress for everyone involved.

By tackling legal matters promptly, you can help ensure that your loved one's preferences are honored and their affairs are managed as they wished, by trusted individuals, without requiring court intervention.

For those with family members in more advanced stages of dementia, stay tuned for next week's discussion on late-stage estate planning strategies and how to prevent family disputes and legal issues concerning your loved one's care.

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This article is a service of 20WestLegal LLC. We don't just draft documents; we ensure you make informed and empowered decisions about life and death for yourself and the people you love. That's why we offer a Planning Session, during which you will get more financially organized than you've ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule an Initial Planning Session and mention this article to find out how to get this $750 session at no charge.

The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer® firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.