Estate Planning for Someone with Dementia


Estate planning is complex in the best of situations. There are financial implications for present and future generations. Emotional triggers include preparing for one’s own demise and trying to equitably distribute cold, hard assets and family heirlooms. The entire process can leave many individuals and families overwhelmed. 

When a spouse or loved begins to suffer from dementia, forming a comprehensive estate plan becomes drastically more difficult. But, a basic grasp of the legal rights of someone suffering from dementia can help smooth the process.

What is Dementia?

Dementia is known as a decline in memory and other mental skills that eventually prevents a person from completing basic, everyday tasks. Alzheimer’s disease is responsible for the majority (roughly 80%) of dementia cases. Strokes and Parkinson’s disease are responsible for a minority of dementia cases. According to the Alzheimer’s Association, dementia occurs when at least two of the following five functions are notably impaired:

  • Memory
  • Communication and language
  • Ability to focus and pay attention
  • Reasoning and judgment
  • Visual perception

Deaths in the United States attributed to Alzheimer’s disease rose 30 percent from 2014 to 2017, according to the Center for Disease Control. As people in Baby Boomer generation move into their 70’s, this increase is expected to continue. The Alzheimer’s Association projects that, barring a medical breakthrough, almost 14 million Americans will have Alzheimer’s by 2050.

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Can Someone with Dementia Sign Legal Documents?

Dementia is classified as a state of being, not a disease, and symptoms can progress slowly. Even if two of the five key cognitive functions are impaired, a person is not necessarily legally incapable of authorizing or signing key documents such as those associated with estate planning -- a will, a trust, and power of attorney. Specific laws can vary by state, but a guiding principle is a person’s current mental state — usually being “of sound mind” — and not a specific diagnosis. For example, Michigan statutes say a person can complete a will or trust if they:

  • can understand that they are providing for the disposition of their property/assets after death;
  • have the ability to know the nature and extent of their property;
  • can recognize their family;
  • can understand in a reasonable manner the general nature and effect of their act in signing a will.

Although an individual who meets the criteria of dementia, or even the diagnosis of Alzheimer’s, might be able to sign estate planning documents, it’s best to complete that work before symptoms begin to progress. If cognition declines and no durable power of attorney has been prepared, the courts may have to set up legal guardianship for a person with dementia.

The court has the capability to appoint two different people -- a guardian to make non-financial decisions (including medical) and a conservator to make financial decisions. In an ideal world, these appointees will have that individual’s best interests at heart, but a level of control is undoubtedly lost by the individual and their family members.

» MORE: Everyone's wishes are different. Here's how to honor your unique loved one.

Preparing the Estate Plan

Once it becomes clear that dementia is going to be a factor in estate planning, the first important step is to bring all the relevant stakeholders together in a discussion. This includes not only the person suffering from dementia and their spouse, if applicable, but all the available adult children and even close friends of that individual. Addressing the situation head-on can help mitigate drama and assure a unified approach to moving forward with the estate plan.

The next step should be to consult experienced professionals. These professionals may include mental health and medical professionals, as well as attorneys who specialize in estate planning and elder care. The medical professionals can help establish the competency of the person dealing with dementia -- whether they are of “sound mind” -- while the attorneys can prepare all the relevant documents and outline options for various scenarios. Creating an end-of-life planning checklist is one way to make sure that all the bases have been covered. In each conversation, it’s critical to include the individual who has dementia. They’ll make decisions for as long as they’re able.

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Essential Legal Documents for People with Dementia

Durable Power of Attorney (POA)
There are two types of POAs that serve different purposes: durable power of attorney for healthcare and durable power of attorney for finances. “Durable” means the document/power will remain in effect, even if the individual is incapacitated. Without the “durable” rider, the POA becomes void at that time.

  • Power of Attorney for Healthcare (frequently called a Health Care Proxy)
    Establishes a trusted individual to make healthcare and end-of-life care decisions for the individual, until death, or until the power is revoked by the individual.
  • Power of Attorney for Finances
    Establishes a trusted individual to take over daily financial decisions and control of accounts for the individual, until death, or until the power is revoked by the individual.

A will can establish who should receive which assets upon the individual’s passing while a trust can protect many assets from a lengthy and costly trip through probate court. An estate planning attorney can explain the details of each document and prepare them for review and signature.

Living Will
A living will is a document that details the specific types of care the individual would or would not want to receive near the end of life. This includes things like whether or not administer CPR, breathing machines, or artificial nutrition.

This document is immensely helpful to the chosen durable power of attorney for healthcare and the care team. It should be noted that living wills are not legally-binding in every US state has a legally-binding living will.

Getting started

Coming up with a comprehensive plan is not impossible if a spouse or loved one has dementia, but it becomes more difficult as other people may have to assume a decision-making role for their loved one if they aren’t of sound mind. Following the steps above and creating a free Cake Plan are multiple ways that will keep you on track for creating an estate plan for a loved one who has dementia.

If you're looking to read more on dementia, head over to our picks for the best books on dementia and Alzheimer's care.

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