How To Ensure Legal Protection for a Parent With Dementia

Creating an estate plan helps older people prepare for what lies ahead. At a minimum, a plan should include a will, a power of attorney, and a health care proxy. These documents detail how to distribute assets upon death and appoint someone to make financial and medical decisions.

For more information on asset protection and long-term care planning for Alzheimer’s or dementia, consult an elder law attorney.

Legal Issues That Can Arise After a Memory Impairment Diagnosis

“For most people, there’s an adjustment period following a diagnosis,” says Neil Rimsky, an elder law attorney at Cuddy & Feder in White Plains, New York.

“And there’s a level of concern, because they’ve heard about the costs of care of Alzheimer’s, and the impact on people’s lives. Part of what lawyers do is explain what the options are, and that there are ways to adjust so the person who has Alzheimer’s can have the best quality of life.”

Legal planning is essential to taking care of a loved one diagnosed with Alzheimer’s disease or other dementia. Legal planning addresses issues such as:

• Who gets to make decisions about medical and financial affairs if they cannot make their own important decisions?
• Who decides whether a person is placed in an assisted living or nursing home community?
• Who gets to appoint the individual with decision-making authority?
• Will the person have enough money to pay for long-term caregiving? What will Medicare or Medicaid be able to cover?

Being Proactive with Legal Planning

“You want to act sooner rather than later for the primary reason that it’s important to engage in the planning process while you maintain the capacity to do so,” says Seth Urbanoski, an elder law attorney at Hachey Urbanoski Law in Boston.

“A lot of folks did a plan when their kids were little and think ‘I’m all set,'” adds Lucy Budman, a tax and estate planning attorney at Curley Law Firm. However, the challenges created by the new diagnosis, such as how to pay for in-home care and, potentially, years at a long-term care facility, may make prior planning inadequate.

One common mistake is assuming Medicare will cover the bulk of expenses. “They believe Medicare will pay for an aide or nursing home costs, and that is not the case,” says Budman. “It’s extremely limited — about 100 days of coverage in a best-case scenario.”

What Is a Power of Attorney?

A durable power of attorney (POA) is a legal document through which you give decision-making authority to another person if you become incapacitated and unable to make your own decisions. There are a couple of different kinds of POAs:

• Health care POAs. Authorizes someone to make health care decisions on your behalf.
• Financial POAs. Authorizes someone to make financial decisions on your behalf.

Advance Directives

An advance directive, also called a health care directive or living will, specifies the type of medical care that you want to receive from your health care provider at the end of your life. For example, do you want to receive life support or life-saving surgery? What kind of life support do you want to receive?

The legal requirements for valid estate planning documents vary by state law. It’s important to meet with an elder law or estate planning attorney if you or a loved one needs an estate plan.

Ensuring the documents are properly drafted can save a great deal of time and money in the future. It’s also important for the person’s caregiver or family members to have copies of these legal documents so that they know what to do when the time comes.

Can Someone With Dementia Set Up a Power of Attorney?

To appoint a power of attorney, the basic rule is that the individual must be an adult (in most states, 18 or older) and have legal capacity to sign a power of attorney document.

Legal capacity “is a gray area,” says Minnesota elder law attorney Laura J. Zdychnec. “There’s a common misconception that a person diagnosed with Alzheimer’s or another form of dementia all of a sudden can’t do anything, legally speaking. That’s completely wrong. The legal capacity to sign a legal document is completely different from a medical diagnosis.”

For example, “In Minnesota and many other states, the capacity to appoint a power of attorney is the same as the capacity to sign a contract. Basically, the person just has to have an understanding of how [the legal document] will work and what the repercussions are of having the document,” Zdychnec adds.

What attorneys do, she says, is “evaluate a person’s capacity to sign a power of attorney based partly on what’s right in front of us — in other words, how well the person seems to comprehend the document. But the evaluation of capacity also depends to some extent on circumstances.”

How Lawyers Assess Legal Capacity

Zdychnec has to ask herself: What are the risk factors? “For example, I’m much more comfortable with a husband signing a POA authorizing his wife of 50 years and his only adult child than I am with that same husband signing off on a POA to a new wife whom he met and married three months ago and who has children of her own.”

In this latter example, “the water is muddy,” says Zdychnec, and may lead to bitter disputes with other family members.

In any event, “it’s not that a person has capacity one day and doesn’t the next, at least when talking about dementia and its progression,” says Zdychnec. Someone in the early stages of dementia may still have the mental capacity to sign a power of attorney document.

“Sometimes, we’ll arrange with the family to meet with the person on a good day for them,” she says. As long as “capacity is present at the time when they signed,” the document will be valid. Capacity “doesn’t necessarily require the person’s long-term ability to recall, in the future, the fact that they signed the document.”

Guardianships vs. Advanced Planning

The petition for a guardianship gets filed in court. Anyone concerned with the welfare of the alleged incapacitated person can bring the petition, says Ferreira.

A court evaluator will conduct an independent inquiry, which includes speaking with family members and gathering records. If there’s sufficient evidence that the subject is incapacitated and requires a guardianship, the court will appoint one.

How Do I Get an Attorney for a Patient With Dementia?

First, you want to check if your parent or loved one with dementia has already appointed a power of attorney. If so, that person will have the legal authority to make various decisions on behalf of the person.

If there is no power of attorney, your parent may still have the capacity to appoint someone, despite a dementia diagnosis. It’s essential to speak with an attorney as soon as possible about this.

If there is no power of attorney and your loved one has become incapacitated, you will need to petition the local court for a guardianship or conservatorship order.

A court-appointed guardian or conservator (terminology varies by state) is similar to a power of attorney. They have the authority to make decisions on behalf of the incapacitated person.

The critical difference is that the individual appoints a POA. However, the court appoints a guardian or conservator when the person can’t select a POA. Often, a family member or someone close to the incapacitated person will become the guardian.

Like a POA, a guardian’s decision-making authority ends upon the person’s death.

Qualifying for Medicaid

Medicaid can help lessen the financial burden of caring for an older family member. However, eligibility requires careful planning due to the program’s strict asset and income limits.

You may need to reduce assets by selling them, gifting them to loved ones, or transferring them to an irrevocable trust.

Due to Medicaid’s look-back period, transferring assets generally cannot occur within five years before applying for coverage. However, some states have a much shorter 30-month lookback period. “You need to have a long enough time horizon to be able to meet those requirements,” says Urbanoski.

Find an Experienced Elder Law Attorney

Talk to an elder law attorney to get peace of mind, knowing you are doing all you can to take care of your loved ones. Depending on the nature of the consultation, some elder law attorneys provide free initial meetings.

Find a local elder law attorney in the Super Lawyers directory for legal advice about your situation.