Alzheimer's and Your Home, Your Life Savings

12.01.2023

Alzheimer's disease and other cognitive diseases slowly rob victims of their ability to communicate. However, without taking appropriate legal action, these disabling conditions can end up depriving them of their home and life savings.

As a family member gradually, in small increments, loses their mental capacity, the family is often so overwhelmed emotionally, as well as by medical and practical issues such as housing and care, that they may overlook the need to see a lawyer before capacity is lost. But meeting with an elder law estate planning attorney is a crucial first step.

First, we want to make sure that the person's wishes regarding who will inherit from them are up to date. A review of their current estate plan, whether a will or a trust, is a must. This is also the time to locate the client's bank accounts, investments and insurance policies, review the legal, finance and accounting team, and obtain passwords for any online accounts.

Second, legal documents should be drafted to allow for substituted decision-making. This way, the people they choose will be able to make legal and financial decisions for them when they are no longer able to. Primarily, a Power of Attorney is used, although joint checking accounts are also useful. One or more people can be chosen to act as an agent, and the principal can also choose whether they must act together or independently.

A Health Care Representative is selected to make medical decisions and can and often is someone other than the person making the legal and financial decisions. While only one attorney can act at a time for medical decisions, a successor attorney may be appointed. When making decisions at the end of life, such as withdrawing life support, a living will is also recommended to clearly state if the patient so chooses that they do not wish to be kept alive by artificial means such as tube feeding. This refers to a potential situation in which the patient has no meaningful existence, no hope of recovery, and no ability to feed themselves.

Power of Attorney and Health Care Proxy are essential first steps. If a client becomes incapacitated before implementing their own plan, the state may become involved in the state's plan, i.e. care proceedings. If you have not made the arrangements described above, the state may appoint a legal guardian. Not only is custodial care expensive and time-consuming, but the patient and his family lose control over who will provide supervision. For example, the court may appoint a local lawyer, someone previously unknown to the family. Perhaps the greatest disadvantage of appointing a legal guardian is that the desired asset protection strategies will be subject to court approval, which it may not grant.

People suffering from Alzheimer's disease, Parkinson's disease, or senile dementia often face the prospect of spending years in a nursing home, costing an average of over ten thousand dollars a month in many areas of New York State. Once cognitive impairment is diagnosed, long-term care insurance is unavailable, so alternative methods of asset protection should be explored.

Most people are aware that Medicaid can "look back" for up to five years from the date an applicant transferred assets. It is therefore necessary to establish MAPT as soon as possible after the diagnosis of Alzheimer's disease. Fortunately, five-year hindsight is not an all-or-nothing proposition. If, say, three years pass and a senior needs nursing home care, the family would only have to pay privately for the two years remaining until they become eligible for Medicaid. In other words, it always pays to start.