Alzheimer’s is one of the most devastating and traumatic illnesses a loved one can experience. In Michigan, there are 180,000 people aged 65 and older with Alzheimer’s. According to the Alzheimer’s Association. The number is growing, with an expected population of 220,000 by 2025. Planning for Alzheimer’s before the disease manifests is critical, as once the devastating illness begins to affect cognitive function, making legal decisions is problematic.
The financial and emotional consequences of Alzheimer’s related disability before death are profound. The emotional pain of watching a loved one decline is terrible enough, but if you add the stress of financial uncertainty, particularly as it relates to health care, compounds the problem exponentially. Estate planning attorneys can help you protect your assets and plan for what you hope won’t happen.
There are legal instruments that can assist in making the financial impact of the disease more bearable. First, a Durable Power of Attorney will allow someone to conduct your business and financial affairs in the event you are unable. The fiduciary will be authorized to sign documents on your behalf, binding you to contractual obligations, however, so selection of a prudent and trusted friend or family member is crucial.
Another important vehicle is a trust, which can either be revocable or irrevocable. A revocable trust is a separate legal entity in which you place your assets—and just as the name implies, you are able to take your property back from the trust at your discretion. The trust has complete ownership over the property titled to it, but the trustee, appointed during the creation of the trust, has the authority to direct the trust to dispense, dispose, or sell any assets it contains. Part of creating a trust is nominating a successor trustee, who will have authority to conduct the affairs of the trust when you pass, as well as while you are still living but are no longer able to manage your financial affairs.
An irrevocable trust is a special type of trust that can be used to maintain qualification for governmental benefits, such as Medicaid. Importantly, however, for the trust to be effective to that end, the grantor (creator) of the trust and the beneficiary must not have the ability to control or access the trust’s assets—rather, the assets are controlled by a third-party trustee that has complete discretion to distribute funds as he or she sees fit. Although the trustee will provide funds to the beneficiary under the guidance of the trust document itself, and will be legally bound to exercise his or her duty as trustee in good faith and for the exclusive benefit of the beneficiary, the trustee must be able to cut off all benefits. This is necessary in order for the assets to be considered separate from the beneficiary for purposes of qualifying for governmental benefits. It is important to note that if the funds for the irrevocable trust originate from the beneficiary or his or her spouse, the funds will still be considered part of the grantor’s estate unless the transfer occurred more than 5 years prior to the application for Medicaid.
Other legal instruments regarding healthcare are also important. There are two major instruments that are in reality the same. First is a Power of Attorney for Medical Affairs, although it be titled with a number of different names. This document authorizes someone to make any and all decisions related to your healthcare on your behalf if you are not capable of making them. This document can help avoid costly litigation, particularly where there is a highly contentious familial dispute regarding healthcare. It is important to note that without restriction, this document allows the fiduciary to make all decisions, including those that will result in death. For instance, the decision whether or not to place someone on a ventilator would be reserved for the fiduciary.
An Advanced Directive is a type of medical power of attorney, but it is much more limiting. Where the power of attorney grants the fiduciary full authority to make decisions, the Advanced Directive specifies what types of treatment are desired. For instance, the Advanced Directive might state that in the event of a heart failure, no heroic measures, such as CPR or emergency surgery, are permitted. Of course, there is no way to accurate anticipate every medical situation, so there is a degree of discretion given to the fiduciary in an Advanced Directive document.
The instruments described above are important safeguards, both for you and your family. Moreover, planning should occur at an early age, as if one were to wait too long, you may lose the mental capacity to execute such documents. Then, the only option is for someone to obtain a guardianship, which is much more complex and onerous.
If you are interested in planning for your future healthcare and asset protection, contact the experience attorneys at Neumann Law Group for a free consultation.