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After an Alzheimer’s Diagnosis

How to memorialize your wishes with a carefully crafted estate plan

For the six million Americans currently living with Alzheimer’s and the 14 million expected to receive a dementia diagnosis by 2060, creating an estate plan is a crucial part of preparing for what’s to come. At a minimum, a plan should include a will, power of attorney, and a health care proxy detailing how assets should be distributed upon death and appointing individuals to make financial and medical decisions.

“You want to act sooner 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.

He recommends a team approach, where individuals seek input from their accountant, investment adviser, attorney, and increasingly, a care management agency. These agencies provide “a more holistic approach,” says Urbanoski, and can help families navigate the labyrinth of specialists, treatments and care options.

When you start planning, it’s a good idea to have a recent cognitive assessment, like the MoCA test, to confirm decision-making capacity and offer an extra layer of protection against someone contesting the soundness of your wishes, says Urbanoski.

Unfortunately, people tend to keep Alzheimer’s diagnoses to themselves and do little or no planning, he says. Then, once their capacity diminishes, “family or a medical provider will have to seek court intervention to get a guardian or conservator appointed. Your affairs are under the oversight of the court, your decision-making is not private, and you’ve added another layer of complexity.”

For those with estate plans in place already, perhaps decades old, a timely review makes sense. “A lot of folks did a plan when their kids were little and think ‘I’m all set,’” says 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 that Medicare will pay for an aide or a nursing home, and that is not the case,” says Budman. “It’s extremely limited—about 100 days of coverage in a best-case scenario.”

Attorneys say that while Medicaid can help lessen the financial burden, qualifying for coverage necessitates considerable forethought 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, this movement of assets generally cannot occur within the five years preceding application for coverage. “You need to have a long enough time horizon to be able to meet those requirements,” says Urbanoski.

Massachusetts does not recognize living wills, adds Urbanoski. Instead, treatment preferences, including cardiopulmonary resuscitation and intubation, are typically detailed within the health care proxy and via the Massachusetts Medical Orders for Life-Sustaining Treatment Form, and carried out by an appointed agent.

People often underestimate the extent to which other types of decisions—beyond medical—must be made. Budman says it’s common for the healthy spouse to want to downsize and sell the family home or initiate required minimum distributions from the incapacitated partner’s 401K.

Unfortunately, these transactions aren’t possible without a durable power of attorney, says Budman, and people erroneously believe that joint ownership or beneficiary designations will grant sufficient authority when the time comes. “Beneficiary designations kick in on death, not incapacity,” she says. 

For more on this area of law, see the overview on estate planning.

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