What Caregivers Need to Know About Estate Planning for a Loved One With Dementia - Part 1
Caring for a loved one with dementia presents unique challenges that millions of families navigate every year. As a caregiver, understanding the legal implications of a dementia diagnosis is crucial for ensuring your loved one's wishes are respected and that they receive the best possible care.
In this article, we'll explore the importance of estate planning after a dementia diagnosis and how it can safeguard your loved one's rights and preferences.
Understanding Incapacity
Dementia is a progressive condition that gradually impairs memory, cognition, and daily functioning. As the disease advances, individuals may reach a point where they are no longer capable of making sound decisions regarding their finances, healthcare, and overall well-being.
When dementia progresses to the extent that a person can no longer comprehend information or make reasoned choices, they are considered incapacitated. This legal status means they are unable to make healthcare or financial decisions independently, which can necessitate court intervention if proper planning hasn't been undertaken.
However, there's reassuring news: Even after a dementia diagnosis, it is possible for your loved one to establish a legally-binding estate plan during the early stages of the disease.
Estate Planning in Early Stages of Dementia
Every adult, including those with dementia, should have specific legal documents in place to protect their rights and preferences. The key requirement for creating these documents is mental capacity – the ability to understand the implications of one's decisions at the time of signing.
Importantly, your loved one does not need to be consistently mentally capable to create an estate plan. As long as they have the mental capacity at the moment of signing, the documents will remain valid even if their condition deteriorates later on.
During the early stages of dementia, and ideally before significant health challenges arise, encourage your loved one to create or update the following estate planning documents:
General Durable Power of Attorney
A General Durable Power of Attorney (POA) empowers your loved one to appoint a trusted individual to manage their financial and legal affairs when they are no longer able to do so. This includes tasks such as paying bills, managing investments, and handling property.
As dementia progresses, the POA becomes increasingly crucial. Ensure your loved one designates a reliable person as their financial Power of Attorney while they are still capable of making such decisions.
Revocable Living Trust
While a General Durable POA is vital, some financial institutions may restrict its use or not acknowledge its authority. To ensure comprehensive protection of your loved one's financial wishes, consider establishing a Revocable Living Trust and transferring assets into its name. Merely drafting a Trust document isn't sufficient; assets must be retitled, and beneficiary designations updated to ensure complete coverage under the Trust. The Trustee or Successor Trustee named in this document manages their assets when they are no longer able to.
Power of Attorney for Healthcare
Similar to a General Durable POA, a Power of Attorney for Healthcare (HPOA) designates someone to make medical decisions on behalf of your loved one when they are unable to do so. This document should also include a Declaration to Physicians (Living Will) outlining their preferences regarding medical treatment, life support, and end-of-life care.
Having these documents in place allows your loved one to express their wishes for medical care and ensures those wishes are honored, providing peace of mind for both them and you.
Planning Ahead
One of the most critical steps in preparing for the challenges of dementia is helping your loved one complete their estate planning while they still possess the mental capacity to do so. Waiting until the disease has progressed can limit their options and increase stress for everyone involved.
By addressing legal matters early on, you can ensure that your loved one's preferences are respected and their affairs are managed as they intended, by trusted individuals, without the need for court intervention.
If you are navigating the complexities of caring for a loved one with advanced dementia, stay tuned for next week's article where we will discuss late-stage estate planning options and strategies to avoid family and legal conflicts over your loved one’s care.
Taking proactive steps now can provide invaluable support and clarity during a challenging time.
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This article is a service of Zarda Law, S.C. We do not just draft documents; we ensure you make informed decisions about life and death, for yourself and the people you love. That's why we offer a Legacy Planning Session, during which you will get financially organized and make all the best choices for the people you love. You can begin by scheduling a Legacy Planning Session and mention this article to find out how to get this $750 session at no charge.
