PARENTS & HOMEOWNERS: MY 7-STEP ESTATE PLANNING PROCESS WILL PROTECT YOUR HEIRS
From Creditors, Predators & Bad Choices, And Will Help You Become a (Bigger) Hero to Your Family!
7 Things Every Lawyer Should Know About Elder Law
7 THINGS EVERY LAWYER SHOULD KNOW ABOUT ELDER LAW
1. Can my client sign legal documents with dementia?
It depends on how progressed the dementia is and whether, at the time the documents are to be signed, your client has the requisite capacity. Courts have found that even people in the most advanced stages of dementia can be competent to sign legal documents. Understand that the medical definition of incapacity is different from the legal definition of incapacity. A person can be diagnosed with Alzheimer’s Disease or another dementia and still be legally competent to sign documents. It is possible that a doctor could already have written a statement of incapacity regarding the person but this is not determinative of legal incapacity. The capacity requirements for each legal document can be different.
2. What are the core planning documents my client needs?
It is important for most people to have these documents but for people where dementia is an issue, it is even more important. The answer is a thorough “durable” Power of Attorney (short and generic forms often will not suffice), health care directions (often referred to as Living Wills and Health Care Surrogate Designations), a Last Will and Testament and for some, a Trust Agreement.
3. What is the single greatest threat to my clients’ financial security?
For most people over the age of 50, the greatest threat to the finances is the often catastrophic cost of long-term care. People with dementia need more care for longer. Most people do not want to think about or plan for what happens when they need extended care. They make “pretend” plans where they think they will somehow be exempt from needing home care, assisted living or nursing home care. The fact is that most people will require long-term care and most will either not be able to afford it or will get wiped out by the cost. There are legal and ethical ways of protecting one’s life savings against the cost of care without giving away assets and without waiting out penalty periods.
4. Are there dementia-specific provisions for Powers of Attorney?
A power of attorney is not a form document but instead provides a good lawyer with an opportunity to draft to his or client’s anticipated needs. Elder Law Attorneys include many provisions for dementia-specific and long-term care issues not found in typical powers of attorney. For example, one big issue of late is hospitals and nursing homes chasing adult children for their parents’ unpaid bills. The facilities seek the patient’s signature on the admissions agreements but they also want the childrens’ signatures. Most children are not reading the sheaf of papers put in front of them and buried in these documents are often guarantees of payment. The power of attorney should contain a specific provision authorizing the children to sign these admission agreements on your behalf. That way, when they sign, they are signing in a representative capacity and they are not individually liable.
5. Should my documents “ladder” successors or make use of co-agents?
One of the greatest areas where powers of attorney, trusts and health care documents break down is when one agent is unavailable or not able to act and the next person on the list tries to do so. Many documents “ladder” successors by saying if #1 cannot act, then #2 shall act and so on. This might make sense in the theoretical world of drafting a document but in real life, this can create BIG problems. People with dementia and their loved ones are much more likely than others to need to use the documents imminently. In real life, when #2 shows up at the bank to pay bills or at the hospital to make decisions, the bank or hospital is going to say “Where is #1?” because until #1 is first proven to be incompetent or deceased, #2 usually has no authority to act. Proving incapacity can sometimes be difficult and can take time; meanwhile nothing is getting done and often decisions, especially health-related, must be made quickly. There are good ways of using co-agents that are safe, more effective and more likely to lead to the enforcement of your wishes. This would be through the use of Co-Trustees, Co-Powers of Attorney and Co-Surrogates using language that avoids pitfalls.
6. What is a “Lady Bird deed” and should my client have one?
A Lady Bird deed is a special kind of residential real estate deed which allows the property to pass to the children or other heirs immediately upon the clients death without normal costs, probate and court proceedings. The Lady Bird deed allows your client to (1) own their home for the rest of their life; (2) retain their full homestead tax exemption; (3) retain their full homestead creditor protection; (4) where applicable, retain eligibility for Medicaid and other need-based programs; and (5) name beneficiaries of the home very similar to beneficiaries of an insurance policy.
7. How can my client carry their health care documents with them?
You can draft the best, most customized documents in the world but if the document your client needs is not available when they need it, it may do them no good at all. Health care advance directives (including Living Wills, Health Care Powers of Attorney and Health Care Surrogate Designations) must be kept handy. In my office, we fabricated a “Digital Pocket Vault,” a computer flash drive which is about the size of a credit card and which should be kept behind the drivers’ license. If a paramedic responds to an emergency and I cannot speak, the paramedic will look in my wallet for my I.D., and there, will also find this “vault” which can be plugged into the USB drive of any computer including one in an ambulance or hospital.