Estate Planning Amid Cognitive Decline: A Compassionate Guide
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Learning that a parent has dementia, Alzheimer's disease, or cognitive impairment of any kind can be an emotionally challenging and life-altering experience for both the individual with the diagnosis and their family members. Cognitive decline, including conditions like Alzheimer's disease, can have a profound impact on your parent’s ability to manage their financial and legal affairs. Memory loss, impaired judgment, and difficulty in making decisions are common symptoms that can make it challenging to handle financial matters. Without proper estate planning, their assets and healthcare decisions may be subject to unwanted outcomes.
Estate planning is vital to financial preparedness for your parent’s future. While many people recognize the importance of estate planning, not everyone considers the possibility of cognitive decline or dementia, and how it may impact the ability to create an estate plan.
However, this is a critical aspect that should not be overlooked. In this blog, we will explore the significance of estate planning in the face of dementia or cognitive decline and discuss some essential steps to ensure your parent’s wishes are upheld even when they’re no longer able to make decisions for themselves.
Swift and Early Planning Makes a Difference
The earlier you start the estate planning process after a dementia diagnosis, the better. Cognitive decline may progress over time, making it difficult for your parent to make informed decisions.
Gather Important Documents: The first step is to locate existing documents such as wills, trusts, powers of attorney, and healthcare directives.
Identify Assets and Beneficiary Designations: Make a list of your parent's assets, including bank accounts, investments, property, insurance policies, and retirement accounts. For each of the accounts, note whether there are any beneficiaries designated.
Discuss Wishes: Once you’ve gathered the information and identified the documents, it’s time to have a conversation. If your parent is still capable of discussing their wishes, have a candid and compassionate conversation about how they would like their assets to be distributed as well as medical decisions and end-of-life care. It is important to document your parent's wishes in writing, preferably in their own words, or consider recording the conversation for future reference.
If your parent has an estate plan, review the documents to ensure that your parent has designated individuals who are still capable of serving as decision makers and that they have not changed their mind about the decision makers or the distribution of their assets.
Legal Capacity Assessment for a Parent with Dementia
It's important to assess your parent's legal capacity when making decisions about their estate plan. Depending on the stage of dementia, your parent may still have moments of clarity and capacity to make decisions. Consult with their healthcare provider to evaluate their capacity for legal decisions. You should also consult with an attorney experienced in elder law and dementia-related issues for guidance on the specific legal and financial complexities involved in your parent's situation which vary from state to state. Estate planning attorneys will be able to determine if your parent is still capable of making legally binding decisions. If your parent has capacity, they should create essential estate planning documents as soon as possible.
Remember, these documents can only be created by an individual with testamentary capacity (maybe include formal definition?). If your parent becomes incapacitated, it is too late for them to create and execute these estate planning documents.
Guardianship and Conservatorship
Luckily, there is another option. And while it is not ideal (due to time and money), in cases where your parent's cognitive decline is severe and they no longer have the capacity to create legal documents, you can pursue guardianship or conservatorship through the court. This legal process allows someone to make decisions on behalf of the individual who is incapacitated. This should be a last resort and is best done with legal guidance.
Update or Create Legal Documents
If your parent still has moments of clarity and capacity to make decisions, work with an attorney to create or update essential estate planning documents (including a General Durable Power of Attorney, Medical Power of Attorney, Advance Directive, and a Will or Trust), These documents are discussed in more detail in Estate Planning for Aging Parents. Ensure these documents accurately reflect your parent's current wishes regarding decision-makers, asset distribution and beneficiaries, are executed properly, reviewed regularly, stored in a safe place, and shared with family members and appropriate professionals.
Appoint Decision-Makers: Some documents (like powers of attorney and some trusts) appoint individuals to act on your parent’s behalf while they are still alive. It is important the individuals named are trustworthy, responsible and capable of serving in this role. Other documents (like Wills and Trust) appoint individuals to act on your parent's behalf after their death. Make sure your parent understands the difference between the various roles and help them select the appropriate person.
Family Dynamics: Be aware of family dynamics and potential conflicts that may arise during this process. It's essential to foster understanding and cooperation among family members to minimize disputes and ensure your parent's wishes are respected.
Execute documents: When your parent is ready to sign legal documents, ensure they are executed properly in accordance with your state's laws, which may require witnesses and notarization.
Regular Review: Periodically review and update your parent's estate plan to account for changes in their condition, assets, or preferences. Estate planning is not a one-time task; it should be periodically reviewed and updated as your parent’s circumstances change. This is particularly important when facing cognitive decline, as your parent’s capacity to make decisions may diminish over time. Regular reviews will help ensure that your parent’s estate plan remains effective and in line with their wishes.
Record Keeping for a Parent with Dementia
Help your parent organize and maintain important documents, such as legal documents, financial records, and insurance policies, in a secure and easily accessible place. This will make sure the right individuals have access to necessary documents and information in an emergency and will help simplify the administrative process after your parent’s death. Store the original estate planning documents in a safe and accessible place, such as a locked filing cabinet or a safe deposit box. Depending on your parent’s condition, you may decide it is best to keep the originals outside their home to keep them safe and eliminate the risk of your parent losing the documents. Inform other family members, especially those named in the estate plan or designated as decision-makers, about your parent's wishes and the estate planning process. Share copies of relevant legal documents with family members and key advisors.
Protection from Financial Exploitation
Dementia can make individuals vulnerable to financial exploitation. Take steps to safeguard your parent's assets, monitor their financial accounts for unusual activity, and consider appointing a trusted family member or friend as a co-signer on their accounts. If you suspect elder abuse, contact local police and an elder law attorney immediately.
Self-care
Last, but certainly not least, you should not underestimate the emotion impact of dealing with your parent’s diagnosis. You may experience a profound sense of grief and loss as you witness the gradual decline of your parent's cognitive and functional abilities. It's common to feel anxious and uncertain about the future, as Alzheimer's is a progressive disease with no cure. Managing the changes in your parent's personality, behavior, and memory can be emotionally draining and challenging. Take the time to prioritize yourself and your needs including your mental and physical health.
Wrapping Up Estate Planning for a Parent with Dementia
As evidenced by the key considerations we’ve outlined in this blog, supporting a parent with dementia or Alzheimer's disease through the estate planning process can be emotionally challenging, but it's an essential step to ensure their well-being and protect their assets. Seeking professional advice and approaching the process with empathy and patience are key to making the journey as smooth as possible. Remember that the specific steps may vary depending on your parent's individual situation and the legal requirements in their state. Consulting with professionals, such as an attorney and financial advisor, can help ensure that you navigate the process correctly and legally while protecting your parent's interests. Help your parent with their estate planning journey today to secure a more certain and dignified future. Don’t wait until it’s too late!
As a reminder, if you need help with estate planning for an aging parent and/or parent with dementia, please reach out to us at RBS Law - we’d love to help you support you in securing your parent’s future.