Today, as I met with a client I’ll call “Lily,” she revealed she was recently diagnosed with dementia, yet you wouldn’t know it for most of our meeting. She spoke clearly, talked about her childhood, her love of cooking and dancing, and how she enjoys eating at nice restaurants. She told me about her assets, who she wants to manage her affairs and how she wants everything to go to her son and his kids after she dies. She wants to avoid court and doesn’t want to pay extra taxes—but who does?
As we spoke, she worked hard to follow me. She wanted to understand every word and needed to know how to ensure her son could step in and pay her bills as her dementia progressed. She took great notes as I explained planning options as she progressed to the next chapter of her life, whether she was ready or not.
Her son, “Mike,” who attended the meeting with his mother, planned to go to court for a conservatorship so he could manage Lily’s assets and provide for her. His intentions were good, and you could tell he loved his mother very much. He mistakenly thought that because of his mother’s diagnosis, she no longer could act on her own in making decisions. But unlike Lily, most families do wait until it is too late.
According to the Alzheimer’s Association, there are more than 5.3 million Americans with Alzheimer’s Disease, with someone being diagnosed every 67 seconds. The Alzheimer’s Association has declared Alzheimer’s Disease the biggest health crisis affecting America. While physicians are working hard to discover treatments and cures, what can you do in the meantime to protect yourself from losing the choice of deciding who gets to make decisions for you if you can’t?
Options for estate planning are clear:
- Do nothing: Upon mental incapacity, your family has to go through the conservatorship and guardianship court process. We refer to this as a living probate, where a judge decides who can act on your behalf, and your conservator must report to the court every year regarding how he or she spends your money. This public court process can be humiliating and expensive, requiring your loved ones to file a lawsuit against you to have you declared incapacitated.
- Execute valid health care directives: Arizona allows you to sign a Living Will that controls your end of life decisions, elect an agent to make health care decisions through a Health Care Power of Attorney, and to consent for your agent to admit you into an inpatient or partial psychiatric hospitalization program through a Mental Health Care Power of Attorney. These directive only control your decisions for a health care treatment, which may avoid a guardianship, but do not allow for your agent to manage your financial assets.
- Establish a comprehensive estate plan: In addition to health care directives, you can effectively manage your assets in a Living Trust while you are alive and have capacity, but upon incapacity, the person you previously designated can step in and manage your estate according to your wishes without involving the court. Your personal information stays out of court and in your control, according to your written instructions in your estate plan.
Thankfully for Lily, it is early enough to still put a comprehensive plan in place according to her wishes, and avoid a living probate. She still has capacity to make decisions for her estate. A much better option would be to plan before there is an emergency, or mental diagnoses, while there is no question of capacity or the concerns of undue influence that many become susceptible to once they are diagnosed with mental illness.
Allison Manning enjoys helping clients establish peace of mind in their estate plans and building relationships with her clients. If you would like to make an appointment to find out how we can help protect your legacy, call (520) 529-4000, or visit us online at www.KHarizona.com.