As people live healthier lives, they tend to live longer ones, for the most part. But with advancing ages comes increased risk of dementia, including Alzheimer's disease. About one-third of people who live past age 85 will have the disease, according to the Alzheimer's Association. More than 6 million Americans currently suffer from dementia, and that number is projected to increase to more than 13 million by 2050, unless medical breakthroughs help alleviate the suffering.
People with dementia eventually lose memory, cognitive ability, and language. If you are concerned that you or someone you love has dementia, it's very important to get legal documents in place before it's too late. You can't make a legally valid will, power of attorney, or other legal document unless you are of sound mind—that is, you must understand your family circumstances; act of your own free will; and understand the consequences of your choices.
Here are the key documents to move forward with.
Having a financial durable power of attorney (DPOA) in place can be a huge help to you and your loved ones. This document lets you choose someone—who's often called your "attorney-in-fact" or your "agent"—to have control over your financial assets if it's ever necessary.
You can give your agent authority immediately. You also can create a type of DPOA called a "springing power of attorney" that gives your agent authority to act only when a doctor certifies that you're mentally incapacitated.
Many people choose to make the DPOA effective immediately, trusting that the person they've chosen won't act unless it's necessary. If you want to use a springing power of attorney, be aware that they can have several drawbacks—including the potential that your agent won't be able to act quickly when needed.
A DPOA is important if there's a long period of incapacity, as there often is with dementia. (People with Alzheimer's disease live an average of four to eight years with the disease, according to the Alzheimer's Association.) For instance, your agent could pay bills for you from your checking account. Your agent also could use the DPOA to sell your assets to help pay for your expenses.
Without a DPOA, no one—not even your spouse, or the executor you've appointed in your will—would have authority to take care of all necessary financial tasks, such as paying bills, managing retirement accounts, or selling assets. However, your spouse would have authority over most accounts owned jointly with you—for instance, a joint checking account.
If you don't have a DPOA and become incapacitated, your family members would have to go to court and ask that the court appoint a conservator or guardian to handle your money. Going forward, the conservator would be subject to court oversight. The whole process is expensive, intrusive, and time-consuming.
Your health care directives are the next most important documents to create when you're planning for the possibility of dementia. In these documents, you provide directions to your health care providers about your wishes for end-of-life care, and you name someone to carry out your wishes if you can't. These documents can give enormous relief to the family members who must make difficult decisions about your care when you are unable to do so. If they have clear direction from you, it will make their lives far easier at a difficult time.
There are two parts to a health care directive. They go by different names in different states, but their functions are the same:
A living will allows you to express your wishes for end-of-life care. Living wills typically cover pain relief and medical treatments such as surgery, resuscitation, ventilators, and feeding tubes. You can go into as much (or as little) detail as you wish. For example, you might simply say that you want everything necessary to relieve pain (palliative care or comfort care) but that in certain circumstances you don't want to receive extraordinary measures such as CPR.
With a health care power of attorney, you give someone you trust the authority to make medical decisions on your behalf if someday you no longer can. This person, called your proxy or agent, also will have access to your medical records. Your agent will be in charge of making sure the wishes set out in your living will are honored.
Once you've taken care of the documents that give someone authority to make decisions for you if you're ever incapacitated, the next step is to take care of leaving your assets to the people or organizations you want to inherit them.
It's a good idea for most people to have a simple will, which leaves your assets to the beneficiaries of your choice. In your will, you also name your executor (personal representative), the person who will carry out your wishes after your death.
It's easy to make a simple will; many people do it without hiring a lawyer. But some people—like people who have significant wealth or children with special needs—often need more complicated estate planning documents and might need help from an attorney.
For many people, significant assets pass not through a will, but under beneficiary designations you make in other documents. For example, if you enrolled in a retirement savings plan where you work or bought life insurance, you probably named a beneficiary on a form provided by the plan administrator or the insurance company.
It's also common to name payable-on-death (POD) beneficiaries for bank accounts, to register vehicles in transfer-on-death form (in states that allow this), or to name a beneficiary for a savings bond. It's a good idea to review those designations and think about any changes you might want to make. You can't make these changes in your will; instead, ask the retirement plan administrator, bank, insurance company, or other institution for a new beneficiary form.
A revocable living trust, like a will, lets you leave your assets to whomever you choose. The advantage of a trust is that after your death, your beneficiaries don't have to conduct a probate court proceeding before wrapping up your affairs.
A trust can also help with planning for dementia, because your successor trustee (the person you name to take over the trust after your death) can take control of trust assets if you become incapacitated. The trustee's authority extends only to assets held in the name of the trust, however. So, it's a good idea to have a DPOA even if you have a trust because your trustee won't have authority to manage assets that aren't owned by the trust.
To make any of these documents, you can use Quicken WillMaker & Trust software, which lets you tailor documents to your situation and your state's laws. If you feel uncomfortable making your own documents, you can speak with an estate planning attorney who is licensed in your state.
If you or a loved one needs help with dementia, the federal government has a list of resources. There are also state and local agencies and nonprofit organizations like the Alzheimer's Association that can provide resources.