Many people are unprepared to deal with the financial consequences of a serious illness such as Alzheimer’s disease.
Legal and medical experts encourage people recently diagnosed with a serious illness — particularly one that is expected to cause declining mental and physical health — to examine and update their financial and health care arrangements as soon as possible. Basic legal and financial instruments, such as a will, a living trust, and advance directives, are available to ensure that the person’s late-stage or end-of-life health care and financial decisions are carried out.
A complication of diseases such as Alzheimer’s is that the person may lack or gradually lose the ability to think clearly. This change affects his or her ability to participate meaningfully in decision making and makes early legal and financial planning even more important. Although difficult questions often arise, advance planning can help people with Alzheimer’s and their families clarify their wishes and make well-informed decisions about health care and financial arrangements.
When possible, advance planning should take place soon after a diagnosis of early-stage Alzheimer’s disease while the person can participate in discussions. People with early-stage disease are often capable of understanding many aspects and consequences of legal decision making. However, legal and medical experts say that many forms of planning can help the person and his or her family even if the person is diagnosed with later-stage Alzheimer’s.
Advance directives for financial and estate management must be created while the person with Alzheimer’s still can make these decisions (sometimes referred to as “having legal capacity” to make decisions). These directives may include some or all of the following:
A Will indicates how a person’s assets and estate will be distributed upon death. It also can specify:
- arrangements for care of minors
- trusts to manage the estate
- funeral and/or burial arrangements
Medical and legal experts say that the newly diagnosed person with Alzheimer’s and his or her family should move quickly to make or update a will and secure the estate.
A Durable Power of Attorney for Finances names someone to make financial decisions when the person with Alzheimer’s disease no longer can. It can help people with the disease and their families avoid court actions that may take away control of financial affairs.
A Living Trust provides instructions about the person’s estate and appoints someone, called the trustee, to hold title to property and funds for the beneficiaries. The trustee follows these instructions after the person no longer can manage his or her affairs.
The person with Alzheimer’s disease also can name the trustee as the health care proxy through the durable power of attorney for health care.
A living trust can:
- include a wide range of property
- provide a detailed plan for property disposition
- avoid the expense and delay of probate (in which the courts establish the validity of a will)
- state how property should be distributed when the last beneficiary dies and whether the trust should continue to benefit others
Facing Alzheimer’s disease can be emotionally wrenching for all concerned. Advance financial planning can help people diagnosed with Alzheimer’s and their families confront tough questions about future treatment, caregiving, and legal arrangements.
Find more information at the NIH’s National Institute on Aging.