November is National Alzheimer’s Disease Awareness Month. Alzheimer’s Disease is a degenerative brain disease caused by brain cell damage. Early symptoms include not being able to remember new information. Cognitive ability continues to decline, and eventually seemingly simple tasks like speaking and walking are troublesome. Every 65 seconds, someone in the United States develops Alzheimer’s Disease. About 5.7 million Americans currently suffer from this devastating disease. Currently, there is no cure.
After someone receives an Alzheimer’s Disease diagnosis, it can be very overwhelming. Many questions will arise, such as:
Powers of Attorney
A Power of Attorney is a legal document that names someone, an “agent”, to act on behalf of another person, the “principal”. A Healthcare Power of Attorney names an agent to make medical decisions for the principal. The agent can also access medical records and talk with doctors. A Financial Power of Attorney names an agent to act on the principal’s behalf regarding finances. Depending upon the terms of the Power of Attorney, this could include accessing bank accounts, paying creditors, selling or purchasing real property, accessing online or digital accounts, changing beneficiary designations on retirement assets or life insurance policies, and many more various powers.
A Power of Attorney can be effective immediately, meaning the agent has the powers described in the document even while the principal is competent. Or, the power can be springing, which means the agent’s powers are only effective when the principal is unable to make those decisions on their own behalf. It is important for someone who has recently had an Alzheimer’s diagnosis to have these documents in place. Alzheimer’s Disease will eventually leave the individual unable to make healthcare and financial decisions on their own. Having these documents in place will allow the designated agent to take care of these decisions when the time comes.
Once the Powers of Attorney are in place, the principal should discuss their desires for care with their agent. The agent’s job is to carry out tasks on behalf of the principal so they will need to know how the principal would prefer things to go. What type of care is desired? In what setting? Are there any actions that the principal would be opposed to? Are there religious preferences the agent should take into account?
The principal must have capacity to sign a Power of Attorney. Legal capacity means understanding the consequences of one’s actions. This is why acting early is important. Alzheimer’s Disease can be swift in effecting one’s ability to have legal capacity. If Powers of Attorney are not in place and the principal’s condition deteriorates to the point that the principal no longer has legal capacity, the principal’s family would have to seek court intervention to have the principal declared incompetent. Then, the court would name someone who can legally act on behalf of the principal. The court process and be costly and time-consuming, and the principal’s wishes may not be carried out. Having Powers of Attorney in place is an important step after an Alzheimer’s diagnosis.
Planning for Long-term Care
Roughly 48% of nursing home residents have some form of dementia, including Alzheimer’s Disease. The disease is such that one’s ability to care for themselves declines to the point of potentially needing around-the-clock care. But before nursing home care becomes necessary, it is likely that the Alzheimer’s patient will need home care or assisted living care. The average nursing home in the United States costs $8,365 per month. The Alzheimer’s Association estimates that end-of-life care for a patient can span $233,000 and $367,000. Planning for how to pay for this care is crucial.
Long-term care is not covered under standard medical insurance policies. An elder law attorney may help a client explore long-term care insurance products. A traditional long-term care insurance policy will pay for care when the policy holder can no longer perform two activities of daily living, including dressing, grooming, eating, contingence management, ambulating, and bathing. However, policies can be very expensive any may only cover a few years of care. Another type of long-term care policy is called a hybrid plan. This type of plan allows the policy holder to access the death benefit while alive. So, the policy holder would use the death-benefit funds to pay for their long-term care and any remaining amount would be paid to beneficiaries upon the policy holder’s death. However, hybrid plans are usually even more expensive than traditional plans.
As an alternative to long-term care insurance, an elder law attorney may help a client become eligible for Medicaid. In order for Medicaid to pay for long-term care services, the applicant must meet strict financial criteria. Most folks are over this resource limit, but legal planning can be done so that the client can protect assets while still qualifying for Medicaid. This planning can include the use of trusts, making exempt transfers, utilizing Caregiver Agreements, and more. For eligible Veterans, the attorney would also likely seek Veterans benefits.
An elder law attorney may refer their client to a care coordinator. This is someone who assess the home and make recommended changes to better accommodate an Alzheimer’s patient. The care coordinator can also help navigate care options and help put a care plan in place. Having this advocate in place to help navigate care options can be crucial for helping family and friends care for their loved one with Alzheimer’s Disease.
Receiving an Alzheimer’s diagnosis can be devastating for the patient, as well as for their family and friends. Having competent help in navigating through the new normal is key. If there is a plan in place, especially a plan that the one suffering from Alzheimer’s helped form, then the family can focus on each other and have less stress. Elder law attorneys are an integral part of setting up this plan and setting up the family for success on their new path.
Written by Robert T. Nickerson
I hate to bring up another sad issue that’s unfortunately common with families, but it has to do with funerals. I'm not talking about them in general, but rather how the arraignments are planned. Chances are various family members are going to disagree with how a funeral and a burial are set for a loved one.
Wills typically have the wishes of one if they want to be buried, cremated, or however they see appropriate. The problem is that they're not always legally binding. In fact, a lot believe that the "next of kin" has the authority on the funeral and burial.
Not every family is going to want a funeral, but there is a responsibility to dispose of the body. Now I'm not encouraging you to take your loved one to the dump, but again, you want to think about who will be likely to follow through on ones wishes. If not one person is set in stone within an estate plan, then the law provides a list of people who would be in line.
As of 2020, the law states that the following people would have to take the position of a funeral and burial arrangements (if one is not setup before hand)
If a burial dispute happens, then it's possible for the court to step in to help decide what happens to the loved one.
My advice would be to go above a will and get an estate plan. This is more set in stone with the wishes of the family member on your mind. This is unlikely to be challenged in court. Even is a family member was going to challenge this, it would have little chance of changing anything.
I can certainty go into more detail on what an estate plan can do for you and your family. Contact our office for more detail.
By Jill Roamer J.D.
With National Special Needs Law Month coming to a close, let’s take a look at recent final regulations issued by the Internal Revenue Service (IRS). The new regulations clarify rules regarding ABLE accounts.
ABLE accounts were authorized by the Achieving a Better Life Experience Act of 2014. To be eligible to open an ABLE account, you must be an individual with a significant disability that began before age twenty-six. Such accounts allow those with disabilities and their families to save money in a tax-beneficial way. Contributions to an ABLE account are not tax deductible and are done with post-tax earnings, but withdrawals and investment income earned will not be taxed.
Possibly the best advantage of an ABLE account is that the balance therein will not be a countable resource when applying for needs-based public benefits, such as Supplemental Security Income. There are limits on how much can be deposited into an ABLE account – for 2020, the annual limit for each contributor is $15,000. There are also lifetime caps, set by individual states. Many such lifetime limits are as much as $300,000. Withdraws from the account can be used for any expense that related to living with a disability, including healthcare costs, living expenses, and education.
The final regulations issued by the IRS this month amends 26 CFR parts 1, 25, 26 and 301. The purpose of the new regulations is to provide guidance under section 529A of the Internal Revenue Code, which authorized states to create ABLE account programs. These new regulations finalize two proposed regulations, the first proposed in 2015 and the other proposed in 2019. Here are some key take-aways from the new final regulations:
ABLE accounts can be a great resource for folks who are disabled, and a great way for their families to be able to contribute in a meaningful way. And with this new guidance, practitioners can be more confident when advising clients about the ins-and-outs of ABLE accounts. Practicing with those who have special needs and their families can be very rewarding. Happy National Special Needs Law Month!
Jeffrey C. Nickerson - Estate Planning Attorney - My Passion is Special Needs Planning!