• These are the most important papers to get signed
  • Don't wait until it's too late
  • Avoid intestate laws and conservatorships

When your spouse or other family member exhibits symptoms and is diagnosed with dementia, like Alzheimer's Disease or Vascular Dementia, it is scary and overwhelming. There are so many questions, and the last thing you probably want to worry about is the array of legal issues to consider. Unfortunately, getting your documents prepared and organized is an important and necessary part of the journey, and doing so during the early stages on can make the entire process a little smoother along the way.

There are a few legal documents you should be sure to obtain right away. If these documents already exist, ensure they contain the most up-to-date law and, most importantly, clearly express your loved one's current wishes. In either case, it is crucial that the patient handle this while he or she still has the mental capacity to make legal decisions.

The Necessary Documents

      1. Advanced Healthcare Directive (in some states, this is two documents — a Living Will and a Power of Attorney for Healthcare)
      2. Power of Attorney for Financial Matters
      3. Will
      4. Living Trust

Here is a definition and explanation of each to make it easier for you to understand:

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Advanced Healthcare Directive

An Advance Healthcare Directive allows your loved one to inform medical professionals and family members what kind of care they want when they can't communicate those wishes themselves. As mentioned above, some states instead break this into a Living Will and a Durable Power of Attorney for Healthcare. Please check with an attorney in your state to confirm which document or documents are right for your loved one.

These documents let your loved one indicate what type of medical treatment they do or do not wish to receive if they are too impaired to direct their own care. These typically allow the individual to choose whether they wish to be on life support (or don't even want it to be started) if they are in a terminal condition. This is sometimes referred to as a "Do Not Resuscitate" clause or "DNR."

The documents also permit your loved one to name a trusted person to make medical decisions for them if they are unable to communicate on their own. The person named to make these decisions is usually called an agent or an attorney-in-fact. It is customary for an individual to name a successor or backup agent who can take over if the first named agent is unavailable. For example, your spouse, who has named you as primary agent and a sister as successor, has a debilitating stroke and you can't answer your cell when the hospital calls; in this case, the hospital will call the sister.

By having a Healthcare Directive, or other state-appropriate document, your loved one can avoid having a guardian appointed by the Court. The documents can be drafted such that they are effective as soon as they are executed, or they can become effective only upon incapacity. Guardians and conservators are court-appointed decision‑makers, and may not be whom the individual would choose, especially in what may be contested circumstances (second marriage, no living spouse but several children who can't agree, etc.). Additionally, the process to have the Court appoint a guardian or conservator can be time-consuming, expensive, and in the end, may result in a guardian or conservator who does not know or does not follow the patient's wishes.

Durable Power of Attorney for Finance

A Durable Power of Attorney for Finance allows your loved one to appoint someone to manage their finances if they become incapacitated — mentally or physically — to the point they can no longer handle those issues themselves. If your loved one becomes unable to manage their financial affairs and they have not prepared a Durable Power of Attorney for Finance, a Court proceeding is probably inescapable. You, a close relative, or companion will have to ask a Court for authority over at least some of their financial affairs. Please see: 5 Financial Steps for Dementia Caregivers

As with the Advanced Healthcare Directive, a Durable Power of Attorney for Finance can be drafted to go into effect as soon as it is executed, or you can specify that the power of attorney not go into effect unless a doctor certifies the individual has become incapacitated. This is known as a "springing" Durable Power of Attorney for Finance. It allows your loved one to keep control over their affairs unless and until they become incapacitated, when it "springs" into effect.

When a Durable Power of Attorney for Finance is created, the individual creating the document is giving another person legal authority to act on their behalf. The person with such authority is called an attorney-in-fact. Individuals can give the attorney-in-fact broad power to handle all their finances. As an example, your loved one can give the attorney-in-fact the power to do some or all of the following:

      • use their assets to pay everyday expenses
      • buy, sell, maintain, pay taxes on, and mortgage real estate and other property
      • collect Social Security, Medicare, or other government benefits
      • invest money in stocks, bonds, and mutual funds
      • handle transactions with banks and other financial institutions
      • buy and sell insurance policies and annuities
      • file and pay taxes
      • operate small business

The attorney-in-fact is obligated to act in the incapacitated person's best interests, maintain accurate records, keep their property separate from the incapacitated person's, and avoid conflicts of interest.

It is important to note that a Durable Power of Attorney for Finance ends at the death of the individual for whom it was created. This means your loved one can't give their attorney-in-fact authority to handle financial issues, such as paying debts, making funeral or burial arrangements, transferring their property to heirs, or any other tasks that follow their death. If your loved one wants the attorney-in-fact to have authority to wind down such post-death affairs, a Will or Living Trust (discussed below) is needed.

Both the Durable Power of Attorney for Finance and Advanced Healthcare Directive can be revoked by the individual for whom the documents were created, provided that individual is not, or is no longer, incapacitated.

Will

A Will is a simple way for an individual to address basic estate-planning needs. Mental competence is one of several essential requirements to ensure a Will is legally binding. It is therefore important for your loved one to document their wishes regarding the distribution of the estate while they are still mentally capable of doing so. If your loved one already has a Will at the time of dementia diagnosis, it is important, while they still have the capacity, to review their Will to ensure the distribution of their estate and their choice of executor(s) meets their current wishes. If they are without a Will, it is important for them to evaluate the estate and determine whether a Will or a Living Trust is right for their situation.

Living Trust

A Living Trust, like a Will, is a method by which an individual can designate the distribution of the assets they have at the time of death. Unlike a Will, however, a Living Trust becomes effective as soon as it's executed. This is a very important distinction between the two documents, as it allows for management of the assets held in the Living Trust while the person is still alive, but has become mentally incapacitated to the point they cannot manage their own affairs. Confirmation of incapacity by the person's physician is usually required.

The creator of a Living Trust — in this case, your loved one — is known as the Grantor or the Settlor. The Grantor will designate a Successor Trustee (or series of Successor Trustees) to serve (take charge) when the Grantor/Trustee dies or becomes mentally or physically incapacitated, as described above. Sufficient mental capacity at the time the Living Trust is created is critical to ensure the Living Trust is legally binding, so it is important to create it before mental capacity deteriorates too much.

If your loved one has a valid Living Trust at the time they have been classified by their physician as mentally incapable of handling their own financial affairs, the Successor Trustee — in other words, the person your loved one appointed to administer the Trust — will step in to administer your loved one's Trust assets for the remainder of their life, and handle the distribution of the estate at their death.

If your loved one passes away without having prepared a Will or Living Trust, the estate will be distributed according to the laws of intestate. Simply put, this means the estate will pass to their next of kin, which may not be what was intended or desired. Intestate laws are state-dependent.

One thing all four documents have in common is that, at the time of their creation, the person executing them must be of sound mind (have mental capacity to make such decisions). At the first sign your loved one suffers from dementia, take the time to review existing estate documents, if any, to ensure that their wishes, as well as financial and healthcare management, are properly addressed. If your loved one doesn't have valid estate documents, take the time to educate them about the need for these documents and, if they are amenable, help make arrangements to have the documents prepared. In some instances, an attorney isn't required, but it is always recommended that you seek the advice of a licensed attorney in your area before executing any legal document.

Without these documents, after your loved one becomes incapacitated, you will not have access to their financial information. This includes, but is not limited to, dealing with social security on their behalf, writing checks or executing tax returns. In fact, most utility companies will not even provide basic account information such as outstanding balance to anyone who is not an account holder, unless they possess a Durable Power of Attorney for Finance; this could result in your loved one's water, heat, and other utilities being disconnected for nonpayment. It addition to creating and maintaining the proper legal documents, it is also important to get the person's financial affairs in order.

Without proper estate planning, you will have limited access to your loved one's medical insurance information, medical records (such as the medications they're taking), and you could even be denied visitation rights if they are hospitalized. One of the most heart wrenching experiences is to witness a loved one suffer with a terminal illness, and to know their true intentions regarding healthcare and end-of-life decisions are not being honored, simply because they were never codified.

The only way to rectify a lack of documentation post-incapacity is to seek a conservatorship for your loved one. This requires a Court proceeding. The time and financial cost involved to obtain a conservatorship are significant and can result in critical delays in the meantime — all of which can easily be avoided if your loved one's wishes are documented while they still have the capacity to do so.