Caring for a loved one with dementia is a challenge that millions of families undertake each year. As a caregiver, understanding how a diagnosis of dementia affects your loved one’s legal decision-making is crucial to ensuring their wishes are honored and that you are providing them with the best possible care.

In this blog, we’ll discuss why estate planning is essential—even after a dementia diagnosis—to help protect your loved one’s wishes and rights.

 

Understanding Incapacity

Dementia is a progressive condition that affects thinking, memory, and daily activities. As it progresses, your loved one may eventually lose the ability to make important decisions about their healthcare, finances, and overall well-being.

When dementia makes it hard for someone to understand information and make good decisions, they are considered “incapacitated.” This means they can no longer legally make decisions about their healthcare or finances. This can be a difficult and emotional time for both your loved one and your family. Without proper planning, you may even need to involve the court.

The good news is that with thoughtful estate planning, you can ensure your loved one is cared for by trusted people if they can no longer care for themselves. Even if your loved one has already been diagnosed with dementia, they may still be able to create a legally binding estate plan in the early stages of the disease.

 

Estate Planning In The Early Stages of Dementia

Every adult should create certain legal documents to protect their rights and wishes, and this is no different for a loved one with a dementia diagnosis. What is important to remember is that in order to create a legal document, you need to have mental capacity – meaning you need to be fully aware of what you are doing and what the consequences of your choices will be.

Thankfully, a person does not need to constantly be in a state of capacity to create an estate plan. As long as your loved one has the mental capacity at the moment they sign their estate plan documents, the documents will be valid, even if they regress into a state of incapacity afterward.

In the early stages of dementia, and ideally long before any health problems surface, your loved one should create (or review and update) the following estate planning documents:

 

General Durable Power of Attorney

A General Durable Power of Attorney (POA) is a legal tool that allows your loved one to appoint someone to make financial and legal decisions on their behalf. Their POA can maintain their home, write checks, pay bills, and manage their financial assets. 

This document becomes especially significant as dementia progresses. Encourage your loved one to designate a trusted individual as their financial Power of Attorney while they are still able to make such decisions. 

 

A Revocable Living Trust

A General Durable Power of Attorney (POA) is a valuable tool, but some financial institutions may limit its use or even refuse to recognize it. To fully protect your loved one’s financial wishes, it’s wise to set up a Revocable Living Trust and transfer their assets into the Trust’s name. Keep in mind, simply creating a Trust document isn’t enough—assets must be retitled, and beneficiary designations need to be updated. This ensures that all assets are covered by the Trust and that the Successor Trustee can easily step in when needed.

When creating a Trust, your loved one will appoint someone to manage their assets if they can no longer do so themselves. This person is called the Trustee or Successor Trustee. In many cases, the Trustee and the person named in the POA are the same, but they don’t have to be.

Deciding who should serve in these roles and when your loved one should hand over control of their finances is a key part of the guidance we provide. If you’re unsure about these decisions, please don’t hesitate to contact us. It’s always better to establish these tools and name trusted individuals early, rather than waiting until it’s too late. Once that happens, your family may be left with no choice but to go through a lengthy and costly court process.

By putting these estate planning tools in place and working with us for proactive guidance, you can ensure your loved one’s assets are managed by people they trust as their dementia progresses. One of the most reassuring aspects of this process is that those who take care of these arrangements early often experience greater peace of mind, knowing everything is in order as they navigate this new phase of life.

 

Power of Attorney for Healthcare

Similar to a General Durable POA, a Power of Attorney for Healthcare (HPOA) appoints someone to make medical decisions on behalf of your loved one when they are unable to do so for themselves. Discussing and establishing a Healthcare Power of Attorney early on allows your loved one to express their medical preferences and ensures their wishes are honored. 

Their Power of Attorney for Healthcare should also include a Declaration to Physicians, also called a Living Will, that outlines their desires regarding medical treatment, life support, and end-of-life care. Creating a Declaration to Physicians and discussing their wishes with you ensures that their preferences regarding life-sustaining treatment, resuscitation, and other medical interventions are documented and respected.

The economic burden of caring for a loved one with Alzheimer’s or advanced dementia can be significant – between $2,500 to more than $10,000/month is not unusual. The time to discuss these costs, and what you or your loved one want is right now, before dementia or Alzheimer’s makes it impossible to have any choice.

 

Plan As Early As Possible

One of the most crucial steps in preparing for the challenges of dementia is to help your loved one complete their estate planning while they still have the capacity to do so. Waiting until the later stages of the disease can limit their options and increase stress for everyone involved. 

By addressing legal matters early on, you can ensure that your loved one’s wishes are respected, and their affairs are managed in the way they intended, by the people they trust, without the need for court involvement. 

If you have a loved one with more advanced dementia, check back here next week as we explore late-stage estate planning options and methods to avoid family and legal conflict over your loved one’s care. 

To learn more, click here to schedule a complimentary 15-minute call with our office.

 

This article is a service of Levi Alexander, a Personal Family Lawyer® Firm. 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 Life & Legacy 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 a Life & Legacy Planning Session™.

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.