Strategic Estate Planning for Those Facing Dementia

Recent global health crises, including the COVID-19 pandemic and widespread influenza outbreaks, have highlighted the vulnerabilities of elderly populations—especially those with pre-existing conditions such as multiple sclerosis, Parkinson’s disease, Alzheimer’s disease, and cardiovascular issues. These conditions increase the need for comprehensive health and legal preparedness. Securing financial interests and healthcare preferences through strategic estate planning becomes critical. This is especially important for individuals diagnosed with dementia, whose ability to manage personal affairs can be severely impacted by cognitive decline.

Understanding the Necessity of Tailored Estate Planning for Dementia

Estate planning for individuals with dementia requires a careful, nuanced approach. An approach that respects the progressive nature of the condition. As dementia affects cognitive abilities differently at various stages, timely and customized planning ensures that personal dignity and legal intentions are upheld.

Read what Michael Hackard of Hackard Law has to say  about Estate Planning Challenges with Alzheimer’s.

Legal Capacity and Document Preparation

The ability to sign legal documents, known as legal capacity, varies based on the complexity of the document and the individual’s cognitive condition:

• Wills: To execute a will, one needs “testamentary capacity,” which is the basic understanding of the nature of one’s assets and the logical beneficiaries of such assets.
• Trusts and Advanced Directives: More complex documents, such as revocable trusts and advanced directives, require a higher level of understanding due to their detailed and often intricate stipulations (Alzheimer’s Association, 2020).

For those in the early stages of dementia, it is crucial to arrange these legal documents swiftly after diagnosis to ensure that their wishes are effectively recorded. This ensures wishes are legally upheld as their condition progresses.

Implementing Financial Safeguards

Financial safeguards are essential to prevent potential mismanagement or exploitation as cognitive abilities decline. Consider the following protective measures:

• Independent Financial Monitoring: Appointing an independent, reliable party—such as a CPA or a trusted family member—to oversee financial transactions helps detect and prevent irregular activities. This person typically receives copies of monthly financial statements to verify that all transactions remain above board (National Institute on Aging, 2017).

  Durable Power of Attorney for Finances: This directive lets a trusted individual make financial decisions on behalf of the person with dementia. As the disease progresses, having this authority becomes increasingly vital to ensure proper management of finances (Mayo Clinic, 2019).

How Cognitive Decline May Lead to Financial Exploitation

Proactive and Continuous Planning

1. Early Diagnosis: Encourage seeking a professional diagnosis if dementia symptoms are suspected. Early detection is crucial for effective disease management and timely estate planning.
2. Legal and Financial Consultation: Collaborate with legal and financial experts familiar with elder law and dementia-related planning soon after diagnosis. These professionals can offer specific advice that is both practical and empathetic.
3. Regular Plan Reviews: Given the progressive nature of dementia, regularly revising and updating estate plans is necessary to adapt to the individual’s evolving needs and circumstances (Elder Law Answers, 2021).

The Impact of Comprehensive Estate Planning

Effective estate planning brings immense relief and security to both the individual with dementia and their families. It protects the individual’s assets and ensures they are used according to their wishes. It also respects healthcare preferences and helps the individual maintain control over personal decisions for as long as possible.

Strategic estate planning goes beyond financial and legal tasks. It serves as a profound affirmation of an individual’s life and legacy. It honors their choices and values despite significant health challenges. For those with dementia, crafting thoughtful plans early after diagnosis safeguards their interests and provides peace of mind to everyone involved during difficult times.

Our Expert Liebe Miller–  has experience of what it’s like to have a loved one diagnosed with Alzheimer’s. You can watch the video HERE.