Legal Planning After a Dementia Diagnosis
by: Begley Law Group
by Marianne Johnston, Esq.
The receipt of a dementia diagnosis is life altering and overwhelming to the person receiving the diagnosis and to the person’s family. Obtaining professional advice as soon as possible is crucial to protecting the person’s rights, wishes and assets. If he or she is able and willing, the individual with dementia should be involved in dealing with the related legal and financial matters. Here are the key legal steps to take after a dementia diagnosis:
- Confirm Capacity to Make Legal Decisions
Before going ahead with legal planning, the determination must be made as to whether the person with the diagnosis has the legal capacity to understand and make decisions. Such capacity commonly exists in the early stages of dementia. Unfortunately, the progression of dementia can result in a person losing capacity so moving forward with legal planning quickly after the receipt of a diagnosis is important.
- Execute (or Update) a General Durable Power of Attorney
A general durable power of attorney is a legal document that allows a person (the “principal”) to appoint another individual (the “agent”) to act on their behalf in financial and legal matters. The principal must understand what they are signing. Durable means the document remains effective even if the principal becomes mentally incapacitated. The principal must select an agent who is trustworthy and should also select a similar successor agent. The power of attorney should clearly describe the powers granted to the agent. State law formalities must be followed to ensure the document will be valid. For example, New Jersey requires the principal’s signature to be notarized while other states may also require witness signatures.
- Sign a Health Care Power of Attorney and Advance Directive.
By signing a health care power of attorney, an individual selects the person who will make medical decisions on their behalf when the individual is no longer able to do so. In selecting a health care representative, a person must choose a representative who will honor the person’s health care wishes and not override them. An Advance Directive (aka a living will) outlines a person’s preferences for end-of-life medical care, such as resuscitation, ventilation, and feeding tubes. In this document, a person can authorize the donation of their organs. Having a health care power of attorney and advanced directive also serves to reduce stress and conflict for family members.
- Review and Update Last Will and Testament (and Living Trust)
If the individual does not have a Will, one should be created. If a Will exists, the person with dementia should review the document and update the beneficiaries and executors to reflect their current wishes. They should discuss with their elder care lawyer whether a revocable living trust would better serve their needs. The lawyer will ensure the document complies with state law and is self-proving.
- Review and Update Beneficiary Designations
Assets such as life insurance policies, annuities and retirement accounts (e.g., IRAs & 401Ks) typically pass outside the will in strict accordance with beneficiary designations. Therefore, the person with dementia should review and update these designations to ensure they reflect current wishes.
- Plan for Long-Term Care and Medicaid Eligibility
Dementia often leads to the need for long-term care which is expensive. An elder law attorney can help develop a plan for paying for care and protecting assets while qualifying for Medicaid. Such a plan will prevent the person from taking action that will result in a delay or denial of Medicaid benefits. If a person with a dementia diagnosis is married, Medicaid law affords spousal protections.
- Protect Against Financial Exploitation
Unfortunately, persons with dementia are more vulnerable to financial abuse and fraud. Safeguards can be put in place to limit access to certain accounts. A trusted family member should conduct regular reviews of activity in the individual’s financial accounts.
- Initiate Guardianship Proceedings (if needed)
If an individual with a dementia diagnosis no longer has the capacity to make legal or medical decisions for themselves, the creation of powers of attorney is not possible. Court proceedings for the appointment of a guardian for medical and financial matters should be started. Such efforts are more time-consuming and expensive than creating powers of attorney so early planning is strongly encouraged.
- Document and Communicate Wishes
In addition to creating legal documents, having discussions about the persons values and preferences is important. Such topics include housing preferences (home versus facility care), religious considerations, funeral or burial wishes.
Remember taking legal steps after a dementia diagnosis is not solely about preparing for decline. Early planning empowers the individual with dementia to take control over their future and reduces the legal, financial and emotional burden on family members. While the discussions surrounding these legal issues may be difficult, early and thorough planning ensures the best possible outcome.
Contact a professional at Begley Law Group if you have questions regarding the legal issues related to a dementia diagnosis.