Dementia and Alzheimer’s Estate Planning

From Our “Ask a Question” Mailbag: “I was recently diagnosed with early-stage dementia. Though I am managing my finances, I realize that I may no longer be up to that task in the future. I may not be able to make my own medical decisions. What Dementia and Alzheimer’s Estate Planning can I do now to make sure I am safe and that my children can easily step in and take care of me?”

Dementia and Alzheimer’s Estate Planning.

Upon receiving a diagnosis of Dementia or Alzheimer’s, most people are tempted to shut out the world, put up imaginary walls, and do nothing. This is natural. But this could be harmful to both you and your family. The time to plan for the future is best done while you are still at the top of your game. Likely, that is today.

Considerations to Make Once Diagnosed.

Because Dementia or Alzheimer’s may leave you alive and healthy but unable to make your own decisions, there are three steps you should consider with your estate planning lawyer.

First, Forming a Revocable Living Trust.

Most people think of a Revocable Trust as a legal entity you can form during your lifetime that helps avoid probate. While this is true, Revocable Living Trusts have other advantages. One is setting up a system where it is easy for your family or friends to help manage your assets should you need help.

In summary, you form the Revocable Trust, move your assets, such as real estate and investment accounts, into the trust, and maintain control as the Trustee. You lose no control or benefit. There are no tax ramifications, and if you don’t like the trust, you “revoke” it. So you give up nothing but gain much. You can appoint your child or friend as co-trustee, with the ability to act independently to take care of you. Because the co-trustee has this power, should you slowly become unable to write checks or invest your funds, the co-trustee can quietly and seamlessly begin taking over these tasks.

This is a straightforward explanation. For more information, please read my article “Revocable Trusts: Everything You Need to Know.”

Second, Forming a Durable Power of Attorney.

While a Revocable Trust is an excellent tool for those with Dementia or Alzheimer’s, it cannot address all your needs. For example, you will not move your IRA or 401k into the Revocable Trust for tax reasons. This means that your co-trustee has no power to manage those assets. To address the assets outside the Revocable Trust, you use a Durable Power of Attorney granting your Agent the power to act for you.

Typically, the Agent and your Co-Trustee are the same person. When determining how to pay a bill, this person can pay from the assets in the trust or assets still in your name.

This Agent also addresses issues that may arise with Social Security, your health insurance company, or the IRS. 

Want to learn more? For more information, follow this link to learn about Durable General Powers of Attorney.

Third, Forming a Medical Power of Attorney and Living Will.

While the same person typically serves as your Agent and Co-Trustee, the person you select to step in to make medical decisions if you are incapacitated might be different. Some people are good with finances but terrible in the hospital.  

The person you select as your Surrogate must be able to stand the pressure of making difficult medical decisions, which might include making you DNR. Not everyone is up to this job. Further, you need to select someone who will carry out your wishes. You do not want someone who will do only what they think is “best” for you.

If you want to know more, please read my article, Living Wil and Medical POA: Everything You Need to Know.

In Conclusion, After a Diagnosis, it is Essential to do Dementia and Alzheimer’s Estate Planning.

I hope you found this short article about Dementia and Alzheimer’s Estate Planning. Contact us if you want to know more or have an estate that needs our help. Let our Probate and Estate Planning lawyers help walk you through what can be a confusing process. Feel free to contact our office for a free consultation. It’s All We Do: 

Wills, Trusts, Probate, and Estate Litigation!

It’s What We Do!

Peter Klenk, Esq. Pennsylvania Revocable Trust Lawyer, New Jersey Revocable Trust Attorney

Tags: Estate Lawyer, Estate Planning