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A diagnosis of dementia, a category of diseases affecting memory and thinking that includes Alzheimer’s disease, can feel overwhelming and upsetting. You might worry that you will lose control over your life and ability to make your own decisions. Fortunately, receiving a diagnosis of dementia or Alzheimer’s does not mean that you cannot execute legal documents or make decisions about plans for your future finances and health care.
People with dementia can execute legal documents to plan for their futures when they have the mental state — or capacity — to do so. Capacity refers to your ability to understand the contents of a legal document, such as a will, and know the consequences of executing it. If you know who your family is, understand your assets, and comprehend your will, you can execute a valid will and plan for the distribution of your estate after your death, provided you understand what you are signing and its effect on your life.
The following can help you in planning where you wish to live, what kind of care you receive, and what happens to your assets if you get severely ill or pass away.
Health Care Proxy
Consider appointing a health care agent to make medical decisions if you become incapacitated. You can name a health care agent using a health care proxy, sometimes called a medical power of attorney or a durable power of attorney for health care. Your health care agent can make medical choices if you can no longer do so.
Picking someone you trust, such as a responsible child or spouse, or another family member, can give you peace of mind that they will have your best interests and desires in mind when they make decisions. For instance, dementia patients who prefer receiving in-home care can express this wish to their agent.
In the health care proxy document, you can also state your intentions regarding health care and limit your agent’s capabilities if you wish.
For an added layer of protection, you can also draft an advance directive or living will that states your desires regarding medical treatment. Your living will can express whether you want treatment to prolong your life. A living will is particularly important in providing guidance to the agent named in your health care proxy.
Power of Attorney
Consider appointing a power of attorney to make financial decisions and manage property if you become incapacitated. You can selected a trusted individual to handle your financial affairs if your disease progresses such that you can no longer make financial decisions. Your financial agent can manage your money and pay bills on your behalf, but they cannot use your money for themselves.
In the power of attorney document, you can give your agent whatever financial powers you deem appropriate. For instance, a person might specify that the agent can manage personal accounts, but not sell the family home.
Long-Term Care Planning
After a dementia diagnosis, consider whether you would like to receive long-term care at home or in a facility, and whether you intend to apply for Medicaid in the foreseeable future. If you want to apply for Medicaid, it would be prudent to consult with our elder law attorneys regarding asset preservation planning in order to prepare your finances to become eligible.
Asset Preservation Planning
Depending upon your diagnosis, you may want to consider creating and funding either a revocable trust or an irrevocable trust in order to protect your assets from the cost of long-term care.
Consider meeting with the elder law attorneys at Kommer Bave & Ciccone to discuss your plans for your future.
For additional support and to learn more about Alzheimer’s disease and related disorders, reach out to your local Alzheimer’s Association chapter.
So, you are officially divorced. In starting this new chapter of life, you should update your estate planning documents as soon as possible. You may no longer be legally married, but divorce does not automatically remove your prior spouse from your will, trust, or beneficiary designations. Here are some items to consider updating:
Change Your Advance Directives
When you engage in estate planning, it is standard to complete forms such as a health care proxy or living will. Often, spouses will choose each other as their agents for making health care decisions if they become incapacitated. After a divorce, your prior spouse may be the last person you want handling these matters. Change your documents to appoint someone you trust.
Update Your Power of Attorney
Another document you may have previously executed is a power of attorney. This can give another person a great deal of control over your financial affairs. If your current power of attorney names your prior spouse as your agent, you can revoke it and sign a new one choosing a different person to act as your agent.
Amend Your Will
Upon your divorce, your prior spouse would no longer qualify as a beneficiary under your will. However, if the prior spouse is named as an executor, that will still stand. Many couples designate their partner as the executor of their will. If you do not want your former spouse to be the executor, it is important to review and amend your will now to take him/her out. If your former spouse is named as a beneficiary, some states’ laws, like New York State, provide that in the event of a divorce your former spouse is treated as having predeceased you and therefore any disposition in your will to your former spouse would be void. However, you should still create a new will after a divorce.
Trusts For Your Minor Children
Your will should include a testamentary trust for your children in order to protect assets from being irresponsibly depleted. Life insurance amounts or other assets placed in a trust will be managed by a person whom you can name as trustee. This will prevent the other parent, who could otherwise be in control of the minor children’s finances, from accessing those funds.
Be Aware of What Insurance You Are Required to Maintain
Many divorce settlements set forth that one spouse maintains life insurance and specifies who shall be a beneficiary of the policy. You should ensure your current life insurance policies not only comply with your divorce agreement, but also are not in danger of lapsing.
The same goes for medical insurance. If you are required to maintain medical insurance in a certain manner, review your plan to ensure the correct parties are covered and that it is in good standing.
Failure to comply with your divorce agreement can cause you to wind up back in court.
Review Your Beneficiary Designations
If you are not required to maintain your prior spouse as a beneficiary on your life insurance or retirement accounts, now is the time to update your designations. You should contact your insurance company or retirement administrator to make these changes. Upon your passing, the funds will go to whomever is listed as a beneficiary, even if that is the prior spouse from whom you are divorced.
Consult a New Estate Planner
The best thing you can do after your divorce is work with the Estate Planning Attorneys at Kommer Bave & Ciccone LLP to review your current documents and update them appropriately. Ideally, this person should have no connection to your prior spouse. Keep a copy of your divorce decree and settlement agreement handy. An estate planner will need to review it to evaluate what you need going forward.
As life circumstances change (births, marriages, divorces, and deaths), it may become necessary to make changes to your will. If an estate plan is not kept up-to-date, it can become useless. The best way to make changes is either through a codicil — an amendment to the will — or by creating a new will.
If you have small changes to make to your will (e.g., changing your executor or updating a name that has changed), a codicil may be appropriate. The benefit of a codicil is that it is usually less expensive than redoing the entire will.
If you have significant changes to make to your will (e.g., adding a spouse or removing a beneficiary) or have more than one change, it is generally better to update your will rather than write one or more codicils. The updated will should include a date and a clear statement that all other previous wills and codicils are revoked.
Before you make any changes to your will, consult with the Estate Planning Attorneys at Kommer Bave & Ciccone LLP.