Is your spouse, parent, or other relative at risk of dementia, or suffering from it already? You have some vitally important paperwork to fill out.
A person with dementia needs someone—a relative, say, or a trusted friend—who can make important financial and medical decisions on his or her behalf. It’s critical to assign this job while the person with dementia still has the mental ability, and thus legal capacity, to be involved in making the choice.
Theresa Von Vreckin says she was glad to complete the paperwork for handling her father’s affairs before his dementia progressed too far. A few years ago, she says, her father, Theodore Fisher, starting donating lots of money to random charities, and she began to get worried about his finances. Eventually, with the help of her father’s attorney, Theodore agreed to fill out the necessary documents. “He was resistant at first because he had always taken care of his own finances,” Theresa says, “but I am thankful I was able to get it done before my dad got worse.” (Read more of the family’s story here.)
If you wait too long to do the paperwork, your family member’s dementia may have progressed too far for him or her to legally turn over power, says Shirley Whitenack, president of the National Academy of Elder Law Attorneys. He or she may also grow more difficult and refuse to cooperate.
At that point, your only option is to apply for guardianship and ask a court to declare the person incapacitated. That typically takes six to eight weeks and will cost you thousands of dollars, says Whitenack. And if your loved one—or another family member—contests the application, the cost, time, and emotional pain will only grow.
“Get the documents in place before tragedy hits and emotions are sky high,” says Whitenack.
Because laws vary by state, and because mistakes can be costly, draft these documents with the help of a local certified elder care attorney who understands the relevant state’s laws and regulations. You can find one through NAELA (naela.org) or the National Elder Law Foundation (nelf.org).
Here are the key documents you need:
Durable power of attorney. A power of attorney gives you the authority to make financial decisions for someone else, such as signing checks to pay bills, handling tax returns, and selling a home. Unlike a general power of attorney, a durable power remains in place if the person for whom you are making decisions becomes incapacitated and can’t make decisions for himself or herself. A regular power of attorney ends if the person who issued the power of attorney becomes incapacitated.
A properly executed durable power of attorney should be accepted by all financial institutions. But some banks and brokerages require filling out their own proprietary power of attorney forms. That may happen if the institution is unfamiliar with a power of attorney created in another state, or if the firm is reluctant to honor a “stale” power of attorney that was executed years before.
You could clear potential roadblocks by going in person to the institution with the family member granting you power of attorney and filling out those proprietary forms in advance. If your loved one spends a significant amount of time in another state, it’s prudent to also have a power of attorney drawn up according to that state’s power of attorney laws too, says Whitenack.
Health care proxy. This is essentially a power of attorney for medical decisions. It allows you to make choices about treatments, doctors, and other health-related matters.
Living will. Also known as an advance directive for health care, a living will lets your loved one specify the medical treatment that he or she wants—or doesn’t want—near the end of life.
Updated will. A will dictates what happens to any of your family member’s assets after his or her death.
Living trust. If your loved one with dementia has substantial assets, a living trust makes it easier for a someone else to manage the assets, such as homes and investment accounts. The agent or trustee must follow the specific instructions of the person who created the trust, which can contain all of a person’s assets other than IRAs and 401(k)s, which can only be owned by an individual. For example, a bank account should be changed from an individual’s name to the name of the living trust.
A living trust is also useful in states with onerous probate procedures, because a living trust may allow the estate to avoid probate when distributing the property of a person who has died. Again, it’s important to consult with a knowledgeable local attorney before setting one up.
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