Dementia is a tragedy that can strike in any family, robbing the elderly of their memories and quality of life. The condition can be caused by a wide range of diseases, including Alzheimer’s disease, vascular dementia, Lewy body dementia, frontotemporal dementia, Huntington’s disease, or Parkinson’s disease, as well as strokes and infections. As the population ages, the number of those suffering from dementia is predicted to increase, with one study predicting that by 2050 153 million people will be affected. Another recent study shows that 42% of Americans are at risk of developing dementia at some point after age 55, a much higher rate than was previously believed. This means that approximately half a million new cases of dementia will be diagnosed this year.
A dementia diagnosis can create serious financial problems for families unprepared to shoulder the expenses for long-term care, draining someone’s estate to pay for their care. Worse, not planning for the legal realities of what happens when someone no longer has the mental capacity to make decisions for themselves can leave families in a limbo where nobody has the authority to make key decisions or act on the person’s behalf. Preparing in advance with careful estate planning can help preserve your family’s peace of mind and financial stability as you deal with your loved one’s disease.
Estate planning is most often associated with determining what happens to someone’s property after they die, but in fact some of the most important estate planning decisions to be made involve what happens if you live but are unable to manage your own affairs. A person with dementia gradually loses the ability to handle tasks that were once well within their capability, such as making financial decisions, which can make them prey for fraud or financial abuse. They may also lack the mental capacity to make appropriate medical decisions for themselves.
To prepare for a possible dementia diagnosis (or any medical diagnosis that leaves someone unable to act on their own behalf), a comprehensive estate plan should include:
It’s also important to note that someone who lacks testamentary capacity will be unable to make changes to their will or trust, and may be unable to grant access to key accounts to trusted caregivers, so it is essential that desired arrangements be made before they experience cognitive decline.
While ordinary medical costs for dementia patients are typically covered by regular health insurance or, for those over age 65, by Medicare, expenses for in-home care or a skilled nursing facility are not. Long-term care insurance can help to cover this type of care for those who need assistance with activities of daily living, but due to its cost only a minority of people tend to have it. If they do not, their own assets, such as savings accounts or retirement accounts, will need to be used before they can qualify for government assistance programs such as Medi-Cal.
Careful estate planning can also help prevent having someone’s estate completely drained to pay for the cost of their care. The state is entitled to seek reimbursement from a Medi-Cal member’s estate for care they received after they die, but only from assets that are subject to probate. Medi-Cal is also prevented from seizing someone’s primary residence while they are alive, but if the house is subject to probate, it will be included in the value of assets subject to repayment. Strategies that remove assets from probate, such as putting the home into a trust, can be effective in reducing or eliminating the amount that is exposed to such collections. Again, it is not possible to set up a trust if someone is already cognitively impaired by dementia, so these protections must be put in place well before they are needed.
Nobody wants to consider the possibility that they might be disabled by dementia. A carefully created estate plan can provide essential protection for you, your family, and your legacy. The expert attorneys at Velasco Law Group can provide the guidance you need to ensure that your estate plan will help you meet the most challenging circumstances, with services in English and Spanish to better serve our Southern California community. To schedule your free initial consultation, contact us here today.
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