Early Planning Advised for Alzheimer’s Patients
The rise of Alzheimer’s disease has placed renewed emphasis on the need for older persons to engage in estate planning.
The very least an older person should do is to consider signing a Business and a Health Care Power of Attorney. A Power of Attorney is a document which enables the giver or “principal” to delegate powers to the recipient or “agent”. The agent can be any friend or relative and can also be a bank. The powers delegated can be as broad or as limited as the principal may choose. A limited power may cover only the ability to write checks on one account in order to keep payment of bills current during an illness of limited duration. A broad, general power would enable the agent to perform any and all tasks and make all decisions which the principal could do if able. This broad power is much more suitable in the case of extended illness or progressive conditions such as Alzheimer’s Disease.
As with all estate planning, there are many unknowns. A debilitating condition can be as sudden as a car accident or a stroke, or as slow and insidious as Alzheimer’s, where the victim is not usually aware of the affliction. Therefore, general Business and Health Care Powers of Attorney should be in place before disability occurs. A general power of attorney should be made “durable” which means it shall continue during any incapacity of the principal.
A general Business Power should only be given to an agent who is completely trustworthy and well-known to the principal. There is a potential for serious damage in the event of misuse of the power. An individual agent is obligated by law to use the power to the principal’s benefit, but if misuse occurs, it may be difficult to recover assets from the individual if they have been spent or disposed of. A bank can be a good choice where large value is involved; although there may be a fee charged, the bank is trained and has insurance and/or assets sufficient to cover a loss.
Powers of attorney are usually revocable such that the principal can stop the use of it at any time, so long as the principal remains competent. If an agent begins to take steps which the principal does not favor, immediate written notice of revocation should be served on the agent. Quick action is critical, before the misuse has gone too far to be undone. Again, trust built through a long relationship should help to protect the principal somewhat.
There are unfortunate consequences to the family where an injured or ill person has no power of attorney. If the incapacity goes on for more than several weeks, bills begin to pile up, both medical and the usual personal and household expenses. Also, it may become necessary to make decisions regarding placement for long term care. If no one is legally authorized to deal with these issues, the family finds that it is necessary to go to court for appointment of a guardian. Court costs and attorney’s fees are then incurred. A Petition is filed and a notice must be served on the person, saying that he or she is alleged to be incompetent. If the person is aware at all, this can damage a relationship and cause resentment. Then a hearing is held, in which the judge considers evidence as to the person’s ability to understand his or her business affairs and other factors. If incompetency is proven, a guardian will be appointed, often for both the person and the property of the incompetent. The Guardian may be required to post a bond to guarantee performance of his or her legal duties.
While the guardianship procedures protect the rights of the injured or ill persons, they can be difficult and expensive for the family. All too often in cases such as Alzheimer’s, the close family, spouse, and/or children become overwhelmed by the daily needs and requirements of caring for the victim, and do not attend to the legal aspects until after competency has departed. As soon as a loved one is diagnosed with any progressive illness and before it is too late, the family should see that the victim provides for a power of attorney and also has a current valid Will and possibly a living trust.
Also, a progressive and long illness such as Alzheimer’s often means that the patient will need long-term care in a nursing facility. There are many planning options available to protect assets, but they must be used early, as there are time limits which apply – a person cannot give away assets and expect to receive state assistance soon after. There is presently a five year look-back period. Any gift made within five years prior to the date of application will likely cause ineligibility for state aid; however, there are some exceptions. Even upon the eve of admission to a nursing home, there are planning options to benefit the patient and the family.
The best practice is to consult a local attorney well in advance of receiving a diagnosis such as Alzheimer’s. Once such a diagnosis is known, it is vital to meet with an experienced elder law attorney.