Legal and Financial Planning for People with Alzheimer’s

Many people are unprepared to deal with the legal and 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 documents, 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 make decisions and participate in legal and financial planning.

People with early-stage Alzheimer’s disease can often understand 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 late-stage Alzheimer’s.

There are good reasons to retain a lawyer when preparing advance planning documents. For example, a lawyer can help interpret different state laws and suggest ways to ensure that the person’s and family’s wishes are carried out. It’s important to understand that laws vary by state, and changes in a person’s situation — for instance, a divorce, relocation, or death in the family — can influence how documents are prepared and maintained.

Legal, Financial, and Health Care Planning Documents

Families beginning the legal planning process should discuss a number of strategies and legal documents. Depending on the family situation and the applicable state laws, a lawyer may introduce some or all of the following terms and documents to assist in this process:

  • Documents that communicate the health care wishes of someone who can no longer make health care decisions
  • Documents that communicate the financial management and estate plan wishes of someone who can no longer make financial decisions

Learn how to get your affairs in order.

Advance Health Care Directives for People with Alzheimer’s

Advance directives for health care are documents that communicate the health care wishes of a person with Alzheimer’s disease. These decisions are then carried out after the person no longer can make decisions. In most cases, these documents must be prepared while the person is legally able to execute them.

A living will records a person’s wishes for medical treatment near the end of life or if the person is permanently unconscious and cannot make decisions about emergency treatment.

A durable power of attorney for health care designates a person, sometimes called an agent or proxy, to make health care decisions when the person with Alzheimer’s disease no longer can do so.

A Do Not Resuscitate Order instructs health care professionals not to perform cardiopulmonary resuscitation (CPR) if a person’s heart stops or if she or she stops breathing. A DNR order is signed by a doctor and put in a person’s medical chart.

Overview of Medical Documents
Medical Document How it is Used
Living Will
Describes and instructs how the person wants end-of-life health care managed
Durable Power of Attorney for Health Care
Gives a designated person the authority to make health care decisions on behalf of the person with Alzheimer’s
Do Not Resuscitate Order
Instructs health care professionals not to perform CPR in case of stopped heart or stopped breathing

In addition to these, there may be other documents discussing organ and tissue donation, dialysis, and blood transfusions. For more information about advance directives for health care, see Advance Care Planning: Health Care Directives.

Advance Directives for Financial and Estate Management

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 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
  • Gifts
  • 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 with Alzheimer’s no longer can manage his or her affairs.

The person with Alzheimer’s disease also can name the trustee as the healthcare 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
Overview of Legal and Financial Documents
Legal/Financial Document How It Is Used
Indicates how a person’s assets and estate will be distributed among beneficiaries after his/her death
Durable Power of Attorney for Finances
Gives a designated person the authority to make legal/financial decisions on behalf of the person with Alzheimer’s
Living Trust
Gives a designated person (trustee) the authority to hold and distribute property and funds for the person with Alzheimer’s

Where Can I Get Help with Legal and Financial Planning?

Health care providers cannot act as legal or financial advisers, but they can encourage planning discussions between patients and their families. Qualified clinicians can also guide patients, families, the care team, attorneys, and judges regarding the patient’s ability to make decisions. Discussing advance care planning decisions with a doctor is free through Medicare during the annual wellness visit. Private health insurance may also cover these discussions.

An elder law attorney helps older people and families interpret state laws, plan how their wishes will be carried out, understand their financial options, and learn how to preserve financial assets while caring for a loved one.

The National Academy of Elder Law Attorneys and the American Bar Association can help families find qualified attorneys. See the resources at the end of this article for more information.

Geriatric care managers are trained social workers or nurses who can help people with Alzheimer’s disease and their families. Read more about geriatric care managers.

Advance Planning Advice for People with Alzheimer’s

Start discussions early. The rate of decline differs for each person with Alzheimer’s disease, and his or her ability to be involved in the planning will decline over time. People in the early stages of the disease may be able to understand the issues, but they may also be defensive or emotionally unable to deal with difficult questions. Remember that not all people are diagnosed at an early stage. Decision making already may be difficult when Alzheimer’s disease is diagnosed.

Review plans over time. Changes in personal situations — such as a divorce, relocation, or death in the family — and in state laws can affect how legal documents are prepared and maintained. Review plans regularly, and update documents as needed.

Reduce anxiety about funeral and burial arrangements. Advance planning for the funeral and burial can provide a sense of peace and reduce anxiety for both the person with Alzheimer’s and the family.

Legal and Financial Planning Resources for Low-Income Families

Families who cannot afford a lawyer still can do advance planning. Samples of basic health planning documents are available online. Area Agency on Aging officials may provide legal advice or help. Other possible sources of legal assistance and referral include state legal aid offices, state bar associations, local nonprofit agencies, foundations, and social service agencies.