Seeing a loved one decline is not easy. For many family members, witnessing a decline in mental capacity may be even more painful than physical impairment. An estimated 14% of people age 71 and older in the United States suffer from some form of dementia, according to the Alzheimer’s Association’s Alzheimer’s & Dementia 2015. Alzheimer’s is the sixth leading cause of death in the United States and the fifth leading cause of death for individuals age 65 and older, according to the same publication.
While good planning is not a cure, it can ease the financial, planning and end-of-life issues that may arise for families. Here are three steps your clients can take avoid common landmines when it comes to planning for diminished capacity.
Step 1: Have the Tough Conversations Before the Tough Times
“I don’t want to achieve immortality through my work. I want to achieve it through not dying.” -Woody Allen
It is not easy to face your own mortality or that of your parents, spouse or loved ones, but open discussions about preferences for end-of-life care can help family members when they have to make difficult decisions. Helping your clients have a clear understanding of mom or dad’s preferences about care can also keep familial peace among children and grandchildren who will be dealing with their own grief.
A health care agent will be responsible for your clients’ wishes with respect to medical treatment, or lack thereof. Clients should consider whether they want life-sustaining measures like tube feeding and IV hydration in the event that they can no longer eat and swallow and have no hope of recovery. These are issues that they should discuss with their health care agent.
The more guidance you can help your clients impart to their families and named agents while they are mentally competent, the fewer questions—and struggles—families and named agents will face if they must step in as a health care agent.
Whether end-of-life care will be provided at home or in a memory care or assisted living facility is another important discussion point. Financial and practical considerations will play as large a role as personal and emotional preferences, but it is helpful to discuss the possibilities with family members early.
It’s best not to put family members in the position of promising to keep someone at home. Providing in-home care can often be impossible for family members for a number of reasons, such as safety, cost, physical ability to provide hands-on care, etc.
Step 2: Don’t Procrastinate; Plan Now
“Most people don’t plan to fail, they fail to plan.” -John L. Beckley
A basic estate plan typically comprises a will, revocable trust, health care proxy, durable power of attorney and living will. It names fiduciaries to act in the event of incapacity and determines how assets will be held and administered by family members and loved ones after death. It is important to ensure that your clients’ estate plans are up to date and accomplish their wishes with respect to their families.
In order to execute valid estate planning documents, an individual must have the mental capacity to understand the purpose and effect of those documents. Different legal documents require different levels of competence and diminished capacity does not necessarily mean that an individual can no longer execute an estate plan.
A valid will, for example, can be signed in a moment of lucidity by someone who may not be lucid later that same day. However, unpredictable mental competency can lead to family strife and even legal contests. Engaging in estate planning early, and updating those plans in a timely manner as wishes change, helps protect individuals and families who are later faced with diminished capacity.
The health care proxy, durable power of attorney and living will are particularly relevant and important in the event of incapacity.
A health care proxy names someone to make medical decisions, including the ultimate decision to withdraw life sustaining treatment, if incapacitated. A durable power of attorney names someone to make financial decisions, including paying bills, if your client is unable to make them for himself/herself. A living will, while not legally binding, provides guidance to health care agents and loved ones regarding choices with respect to end of life care and treatment.
While a will and revocable trust determine what will happen to your clients’ assets after they die, a durable power of attorney and health care proxy dictate who will be responsible for day-to-day decisions while your client is alive, but incapacitated. In the case of dementia, these fiduciary roles may continue for years, so your client should give careful thought to who they name.
Step 3: Think Carefully Before Having a Family Member Declared Incompetent
“I’m trying to keep a level head. You have to be careful out in the world. It’s so easy to get turned.” -Elvis Presley
Often there is a slow decline in a person’s mental capacity. Lack of capacity one day may be followed by lucidity the next. These situations can be very frustrating for family members as they try to keep the patient’s life – financial and otherwise – on track. Having a doctor diagnose the patient with diminished capacity may be helpful in order to activate a power of attorney or to remove the patient as trustee of trusts.
But beware: an incapacity diagnosis can have many unintended affects.
For example, in order to secure a divorce or to move domicile for tax purposes, there must be intent (i.e., capacity). Therefore, before publicly creating a record of diminished capacity, your client should consult with an attorney or other advisors about how it may impact other plans.
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