In our first post, Mrs. Smith learned of and finally came to terms with her husband's diagnoses of dementia, probably Alzheimer's disease. Alzheimer's is not an easy diagnosis while a person is alive, but experienced doctors can make a fairly accurate diagnosis through eliminating other causes of the dementia. In the case of Mr. Smith, it is fairly clear that he has early stage Alzheimer's. Alzheimer's disease is a progressive, degenerative disorder that attacks the brain's nerve cells, or neurons, resulting in loss of memory, thinking and language skills, executory functioning and behavioral changes. There is no cure and little can be done to slow its progression.
Without any hesitation, the first thing Mrs. Smith needs to do is arrange to have her husband (and herself) sign three basic documents: 1) a Durable General Power of Attorney, 2) a Living Will (technically known as an Advance Medical Directive or Proxy) and 3) a Last Will and Testament. Just because Mr. Smith has been diagnosed with dementia, does not necessarily mean that he lacks the mental capacity to sign these documents. In fact, the level of mental capacity one needs to have in order to sign these basic estate planning documents is quite low. In other words, a dementia diagnosis alone does not preclude someone from executing these types of documents.
So why are these three documents so important? Well, let's look at each one and see:
Durable General Power of Attorney. A Durable General Power of Attorney (POA) is critical since once Mr. Smith can no longer manage his own financial affairs, he will need someone with the legal authority to act on his behalf. While his wife may be able to manage financial assets that are in both their names, she will not be able to access assets in Mr. Smith's name alone like an IRA or 401K account. That is to say, a spouse does not have the inherent legal authority to act on behalf of the other spouse. In fact, certain assets, like real estate, even if jointly owned, cannot be sold or transferred without both spouses signing off. So what happens if Mr. Smith becomes incapacitated and has not signed a POA when he was competent to do so? Simple – Mrs. Smith will need to file a guardianship action in court to have her husband declared legally incapacitated by a judge to the tune of thousands of dollars in legal fees imposing a great deal of financial and emotional stress on the entire family. Why risk that when the solution is a simple POA.
Living Will. Like a POA, a living will is also critical so that someone has the legal authority to make medical decisions for Mr. Smith once he is unable to do so for himself. The POA is for financial decision making while the Living Will is for medical decision making. The person you appoint to make health decisions is called a Health Care Representative (or Proxy) and they are required to follow your wishes. Unlike the POA, however, the Living Will also allows a person to describe situations in which they would or would not want to be kept alive by extraordinary medical interventions like CPR, a ventilator, blood transfusions and the like. If you do not have a Living Will with this type of directive, there is nothing to guide anyone in terms of carrying out your wishes and you are left at the mercy of the medical profession and certain family members who may have their own agenda. Keep in mind that the medical profession is in the business of treating people and keeping you alive (as they should) so their default position is to keep you alive as long as possible. This is unfortunate since it is at odds with what most people feel which is that they would not want to be kept alive through artificial means. But if you do not tell us that in writing and if you do not appoint someone who will act according to your wishes, you run the risk of being on a ventilator or feeding tube well after you would have otherwise preferred. Now, in the case of Mr. Smith, it's quite likely that he and his wife never really discussed his wishes about end of life treatment since admittedly it is not a topic that frequently comes up spontaneously. So his wishes in this regard may not be known. Also, it may be that Mrs. Smith, while she may be the presumptive Health Care Representative to make decisions for her husband, feels too overwhelmed and conflicted to make the difficult decision of withholding or withdrawing life support for her husband. In that case, Mr. Smith may wish to appoint another family member like a child or sibling to be his Health Care Representative knowing they may be able to act more objectively and consistent with his wishes. Certainly, Mrs. Smith would not want to name her husband to serve as her POA or Health Care Representative since he is no longer able to do that.
Unpleasant stuff to think about I realize, but you need to take control of your affairs while you are still in control!
Last Will and Testament. The third document that everyone should have is a Last Will and Testament, though oddly enough many people have not taken the time to prepare one. A Will is the document that distributes your assets once you die. However, it also appoints the person who will administer your estate (your Executor) as well as includes certain trusts for beneficiaries who might be minors or disabled and receiving government benefits like Medicaid and SSI. In the case of Mr. & Mrs. Smith, it would seem likely that they will leave their estates to one another, but they also need to plan for what happens if they both die in a common accident or when the last spouse dies. In that case, the distribution may not be as clear cut and thought needs to be given as to how the estate will be distributed. And, of course, depending on the size of their estate, critical estate tax planning can be addressed in the Will as well.
While Mrs. Smith may still be in denial of her husband's condition, or simply want to believe that it will not get progressively worse, she would do herself and her husband a great service by consulting with an attorney as soon as possible to have these basic planning documents prepared and signed. Time is of the essence while Mr. Smith is still able to understand and sign these documents. In a short period of time that may no longer be the case and this little window of opportunity will fade away.
For more information about Alzheimer 's disease and resources that may be available to you, you can visit www.alznj.org.
Our next post (Post #3 of 5) will focus on Asset Preservation and the puzzling world of Medicaid Eligibility. Who is going to pay for all of this?? Please continue to follow us!