Planning ahead is important for everyone to ensure our wishes are met in the event of death or incapacity. For families coping with Alzheimer's disease and other kinds of dementia planning is even more important because of the uncertainty of your loved one's capacity prognosis.
Power of Attorney. A general, durable power of attorney is a legal document which lists the person or persons authorized to make decisions on behalf of another when that other person has reduced mental capacity. The extent of the power given to the authorized person/s is up to the individual on whose behalf the document is being created. An appropriately designed and executed power of attorney provides great peace of mind to the individual in question as well as to his/her family. With this tool in place, there will always be someone to pay bills, withdraw funds, process any income, etc. on your loved one's behalf, according to their plan.
In some cases, people choose to establish separate powers of attorney - one for finance and another for health care. The two or more people would have authority to make decisions in different areas, financial and health care.
The person/s with the power of attorney for health care, for example, would make choices regarding treatment changes, continuation of life support, etc. The person with this power of attorney also has access to the medical records of the person with Alzheimer's. The person with power of attorney for finances usually has access to the person's bank accounts and ensures that his/her bills, including medical bills are paid.
In situations where the power of attorney is not provided ahead of time, the person who will have power of attorney must go to court to establish guardianship, which can be a lengthy and costly process for the family.
Who Decides Whether You're "Competent"?
There are various competency tests like the Hopkins Competency Assessment Test. However, in many cases, this decision is made within families, when a loved one agrees or asserts that their ability to think clearly and make good decisions is impaired. This revisits the need to begin to talk about this kind of planning early in the Alzheimer's diagnosis. Once dementia-like symptoms become more severe, it becomes more difficult to broach topics like competency with your loved one.
What is an Advanced Directive?
An advanced directive, or living will, states your health care/disability instructions. Advanced directives can provide the following information:
- The individual's wishes regarding life support and other life-lengthening measures;
- The role of the power of attorney for health care;
- The individual's wishes regarding his or her death.
A will is a legal document that lists your wishes regarding the distribution of your property and the care of any minor children after your death.
Both a will and a living trust can transfer assets, but each has unique uses. For example, a living trust can hold assets for your benefit while you are alive, as in the event you lose mental capacity. A will only goes into effect after death, while a revocable living trust goes into effect as soon as it is signed.
A will only governs the disposition of property owned in the deceased's sole name, while a revocable living trust only handles the distribution of property that has been transferred into it.
A will does nothing to plan for mental disability, while a disability plan can be written right into a revocable living trust. Property passing under the terms of a will goes through probate, while property passing under the terms of a revocable living trust avoids probate.
If you are concerned about people knowing your net worth or your beneficiaries, you might decide to transfer your assets through a trust, which, unlike a will, is not a public document. If a person wanted to leave assets to a domestic partner, for example, might use a revocable trust, because it is harder for family members to challenge a trust than a will.
A living trust is also useful if you own real estate in a state that is not your primary residence. Real estate is governed by the probate rules of the state in which it is situated. Unless the property is in a living trust, a Massachusetts resident, for example, who owns a home in Florida would need to probate the property separately there.
For more information about estate planning and the different documents at your disposal, watch our Estate & Retirement Planning videos. To learn firsthand about these documents and other issues surrounding an Alzheimer's diagnosis call our office at 781-237-2815 or register online to attend one of our Trust, Estate and Asset Protection workshops. For more information about dealing with all the various intricacies of Alzheimer's, please also visit us online to read the valuable information in our Alzheimer's Resources Kit.