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After Dementia: Financial and Legal Planning
Written by OurParents Staff
about the author
4 minute readLast updated April 3, 2023
If your parent has recently been diagnosed with Alzheimer’s disease or another form of dementia, talking about their future care needs might be uncomfortable. However, having a clear plan in place can make it easier for everyone on their care team to offer assistance in a way that’s in line with what your parent wants. Whether your loved one needs to arrange their finances for long-term care or appoint a power of attorney, it’s best to do so sooner than later.
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Preparing for a future after dementia
“No one likes to talk about end-of-life care,” says Kim Boyer, a certified elder law attorney and founder of Boyer Law Group. “The majority of clients who come to us are dealing with a current crisis for which there’s been no preparation.” We all hope that we’ll be fortunate enough to avoid mental and physical incapacitation in our old age. But according to the Alzheimer’s Association, the reality is that “1 in 3 seniors dies with Alzheimer’s or another dementia.” Fortunately, there are several steps you can take to keep you and your family on the right path. To create a thorough elder care plan, Boyer recommends the following course of action.
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Designate legal representatives
To fully protect their interests, your loved one should designate a representative to act in each of the following roles:
- Power of attorney for financial matters. This legal document allows your loved one to appoint a trusted individual to make financial decisions on their behalf. These powers can take effect immediately, or under circumstances of their choosing.
- Power of attorney for health care. This legal document allows your loved one to appoint a trusted individual to make medical decisions on their behalf. These powers can also take effect immediately, or under circumstances of their choosing.
Discuss needs and wants with family members
It may be a difficult subject to tackle, but talking with family about what your loved one would like to have happen should they become incapacitated can prevent a lot of future stress. “Being able to say, ‘This is what Mom wanted,’ can relieve a lot of tension for care providers,” Boyer points out. Ask your parent the following questions to get a better idea of their preferences:
- Do you want to live with family if possible? “For some people, the prospect of living in a multigenerational household with lots of family around is pure joy,” says Boyer. “Others would rather do anything but that.” If the answer is yes, ask if they’d want to live with you or another family member.
- What are your health care wishes? What interventions do they want or not want? Under what circumstances? Encourage them to create formal advanced directives while they can. Although the reality is that these documents may not cover every possible scenario, having an informal conversation about their wishes can be helpful in the event that you are forced to make difficult care decisions.
- What portion of your finances is to be spent on your care versus left as an inheritance? Again, your loved one can make a formal plan, but it’s still valuable to discuss their intentions for their financial legacy ahead of time.
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Get finances in order
It’s important to figure out how your parent will pay for the care they may need, and to leave a clear working plan for the party or parties who may eventually take over their affairs. Depending on their age and current situation, they may need to:
- Consider long-term care insurance. “Lots of people don’t want to spend money on benefits they may never use,” says Boyer. “But there are new products available that convert to life-insurance-like policies so that loved ones receive a death benefit if long-term care ends up not being necessary.” Note that someone who’s been diagnosed with dementia likely will not qualify for a long-term care insurance policy.
- Speak with an investment advisor. Chances are good that your parent has already worked with a financial professional to plan for their retirement. But if elder care didn’t figure into their original plan, you may want to sit down with their advisor as a family to devise a new financial strategy.
- Take stock of their assets and liabilities. If they’re unsure of their current net worth, this is the best place to start. Be sure to create a master document listing all of their accounts and any associated contacts. This will be an incredibly helpful resource for your loved one’s financial power of attorney.
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