Legal and Financial Issues

Barring some treatment breakthrough, an Alzheimer's disease diagnosis means that over time, affected individuals become increasingly less able to manage their own legal and financial affairs. They need to have others assume these responsibilities from them. But that's easier said than done. Management of one's own legal and financial affairs is a basic right of all competent adults, and all 50 states and the District of Columbia have laws protecting individuals from the seizure of these rights by others. Fortunately, all 50 states and the District of Columbia also recognize that in certain situations--Alzheimer's disease and other dementias and brain injuries--people may become unable to exercise competent control over their own legal and financial affairs, and they allow control of a demented individual's legal and financial affairs to pass to another person. In Alzheimer's disease, this transition is never easy for either the affected person or for the person who assumes legal and financial control. Here's a brief guide to what people recently diagnosed with Alzheimer's and their caregivers should know.

When to Plan the Legal and Financial Transition

Ideally, the time to plan is as soon as possible after the Alzheimer's diagnosis, when affected individuals can still make legally competent decisions for themselves, and know where their assets are located. Of course, a diagnosis of Alzheimer's disease is very upsetting, and in the immediate aftermath, planning for the affected person's eventual legal and financial dependence on another may not seem a high-priority task. But the sooner you and the person with Alzheimer's tackle the legal and financial aspects of the disease, the better. You can wait until the affected individual is legally incompetent, but if you do, finding the person's assets may be difficult or impossible, and assuming control over the person's legal affairs becomes much more problematic--and expensive.

Durable Powers of Attorney

If you want to give another person the right to make some legal or financial decision for you--for example, signing a contract while you're out of the country--you execute a legal document called a "power of attorney." Power-of-attorney documents are typically short-lived and very specific, empowering the person you designate to act on your behalf only in a limited capacity. However, if there is reason to believe that you might become mentally incapacitated in the foreseeable future, all 50 states and the District of Columbia allow legally competent adults to execute legal documents called "durable powers of attorney," which give the designated decision maker--known as the "agent," or "attorney-in-fact"--broad power over the affected individual's life, for example, the power to place the person in a nursing home and use the person's assets to pay for long-term care. Durable powers of attorney have advantages and disadvantages: On the plus side, compared with other ways to assume legal and financial authority over another, durable powers of attorney are relatively inexpensive to execute and do not require court action or court supervision. In addition, because they bypass the courts, the affected individual's financial affairs remain private and do not become a matter of public record. On the minus side, durable powers of attorney are not court supervised, so there is more potential for abuse by the attorney-in-fact, which may be an issue in families where loved one's disagree about what's best for the affected person. Durable power of attorney documents may also include specific instructions about how the affected individuals wants to be cared for, and a "living will" outlining advanced directives about end-of-life medical treatment. Most experts in the legal aspects of Alzheimer's disease recommend durable powers of attorney as the easiest, most efficient, and cheapest approach to a caregiver's assumption of control of the affected individual's legal and financial affairs. However, the person creating the durable power of attorney document must be competent at the time the durable power of attorney documents are signed, so they must be drafted fairly soon after the Alzheimer's diagnosis. Laws governing durable power of attorney agreements vary from state to state. Software programs abound for creating them, but they may not meet the specific requirements of your state. Your best bet is to have an attorney experienced in elder law draft your loved one's durable power of attorney, or review any durable power of attorney you draft.

Conservatorships

If your loved one becomes legally incompetent and has not executed a durable power of attorney, in order to assume control over the person's legal and financial affairs, you need a court's permission in the form of a "conservatorship." You become the "conservator" and your loved one becomes the "conservatee." Anyone--a spouse, relative, or friend--may petition the court to appoint a conservator for an individual who appears to be incompetent. Once a conservatorship petition is filed, the court assigns an investigator to assess the proposed conservatee's competence, and interview any individuals who may have an interest in the conservatorship--the proposed conservator and other family members--to assess the situation. The next step is a hearing, where the investigator reports back to court, and a judge decides whether to grant the conservatorship. If the court grants conservatorship, the judge appoints the conservator, and specifies the conservator's powers and reporting responsibilities to the court. Conservatorships have advantages and disadvantages: On the plus side, they are court supervised, so there is less potential for abuse by the conservator than there is in durable power of attorney arrangements where the attorney-in-fact is neither court-appointed nor court-supervised. A conservatorship might be a good approach in a situation where family members are in conflict and cannot agree on how to care for the affected individual and deal with the person's assets. On the minus side, conservatorships can be very expensive to establish because the process requires considerable court and investigator time, and family members may want to hire attorneys to represent their views. Laws governing conservatorships vary from state to state. Software programs may help you petition for a conservatorship, but they may not meet the specific requirements of your state. Your best bet is to have an attorney experienced in elder law work with you to establish a conservatorship over your loved one with Alzheimer's disease.

How to Find a Good Attorney

Only a small proportion of attorneys are familiar with the range of issues now increasingly called "elder law." These issues include:

Execution of durable powers of attorney.
Managing the process to obtain conservatorships.
Dealing with Social Security, Medicare, Medicaid, and long-term-care insurance.
Tax and estate issues.
Nursing home issues.

The best way to find an attorney familiar with elder law is by word-of-mouth through contacts in the Alzheimer's community: your local Alzheimer's Association organization, or your Alzheimer's support group. In addition, other organizations in your area that deal with the elderly may be a good resource. Finally, you may be able to obtain useful information from the National Academy of Elder Law Attorneys, 1604 North Country Club Rd., Tucson, AZ 85716; (520) 881-4005; www.primenet.com/elderlaw

How to Find the Affected Person's Assets

The sooner you assemble the affected persons assets, the better. In the early stages of the disease, the person may still recall where financial documents are located. As the disease progresses, people forget where their financial information is located, and you may have considerable difficulty assembling it. Financial items include: Cash Jewelry. Collectibles: art, coins, stamps, antiques, etc. Other valuables: cameras, furnishings, items in storage, etc. Bank account records. Pension and Social Security documents. Insurance policies. Safe deposit box keys. Stock, bond, partnership, and mutual fund ownership paperwork. Real estate deeds. A will. Inheritance documents. Cemetery plot documents. And any other business or financial assets. If the person does not recall where all pertinent financial records are located, then you're faced with finding them. The rule of thumb is: Debts find you, but you must locate assets. To find most financial assets, look for paperwork or notices that arrive through the mail: bank statements, brokerage statements, investment reports, interest and dividend checks, tax information, notices that rent is due on safe deposit boxes or storage units, notices that taxes are due on real estate. Banks usually do not release information about customers, but if your loved one has banked at the same institution for many years and the staff there know your loved one and you, they may bend the rules a bit and reveal all of the person's accounts, investments, and safe deposit box information. To find cash, collectibles, jewelry, and other real goods, look around. Check desks, closets, under beds, in garages, etc. Most people do not hide valuables all that securely, but if you have reason to suspect that your loved one has valuable well hidden, do a more thorough search: Look through books for hidden compartments made by cutting out the center of pages. Look in the pockets of old clothing in closets. Check for cuts in furniture linings that might lead to caches. Finally, when packing up a loved one's home, do it slowly, and examine every item. Then examine the empty home for loose floorboards, or other places valuables might be hidden.