Money's recent article, "5 Essential Documents for Protecting a Loved One with Dementia," says that a person with dementia needs someone—either a relative or a trusted friend—who can make important financial and medical decisions in his or her stead. It's critical to assign this job while the person with dementia is still mentally able to make sound decisions and have the legal capacity to be involved in making the choice.
If you delay with the paperwork, your family member's dementia may progress to the point where he or she cannot legally turn over power. At that point, your only option is to petition for conservatorship and ask a judge to declare the person incapacitated. That can take about two months and may be expensive. It can get even worse if your loved one—or another family member—contests the application.
Laws vary by state, and mistakes can be costly. You should draft these documents with the help of an experienced elder care attorney. Here are the key documents that are recommended:
Durable Power of Attorney. This gives you the authority to make financial decisions for your loved one, like writing checks to pay his or her bills, handling tax returns, and selling a home. 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, as opposed to a regular power of attorney, which terminates if the person who issued it becomes incapacitated. Avoid some headaches and visit the institution with the family member granting you power of attorney to complete any proprietary forms in advance. If your loved one spends a significant amount of time in another state, you should also have a power of attorney drafted by your estate planning attorney according to that state's laws.
Health Care Directive. This is really a power of attorney for medical decisions, allowing you to make choices about treatments, doctors, and other health-related matters. It 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 gives instructions as to what happens to any of your assets after you pass away. Your will needs to be reviewed periodically to reflect changes in your life.
Living Trust. You might also consider this if your loved one with dementia has substantial assets. In California that means assets valued at more than $150,000 to avoid probate. A living trust makes it easier for another to manage the assets, e.g., homes and investment accounts. The trustee must adhere to the specific instructions of the person who created the trust. It 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 talk to a knowledgeable estate planning attorney before setting up any kind of a trust.
One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation. Call our office today to schedule a time for us to sit down and talk about your estate plan, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security. Our office is located in Santa Ana, CA but we serve all of California including Irvine, Orange, Tustin, Newport Beach, and Anaheim.
Reference: Money (December 11, 2015) "5 Essential Documents for Protecting a Loved One with Dementia"