By: Barry E. Haimo, Esq.
February 27, 2018
Dementia and Protecting against Abuse and Wrongdoings of Third Parties
Dementia is a horrible, devastating disease for many reasons. One of the worst, though, has to be the way that it seems to encourage others to take advantage of you – especially in regards to finances.
The sad truth is that most people with Alzheimer’s or another form of dementia will eventually need to cede total control of their health and finances to someone else. At a certain point, they simply won’t have the cognitive capacity to make important decisions.
But the potential for problems starts earlier than this.
Because dementia is typically a long, slow slide, many people go through a sort of “gray area” where they are mostly clear-headed and able to function, but still experiencing bouts of mental fogginess and forgetfulness.
Why does this matter?
Quite simply because it’s a lot easier for people to take advantage of you during this period. Unfortunately, this abuse isn’t limited to strangers either.
Research says that family members are frequently the culprits, with one UK study finding that 70 percent of senior financial abuse is caused by family, and a shocking 50 percent of that is done by the victim’s adult children.
It is also easier to contest any actions you take during this period of time.
For example, let’s say you make a change to your last will and testament.
You have wanted to specifically disinherit a family member for a while, but now that you have received the dementia diagnosis, you finally take action. You take advantage of a time when you are totally clear-headed and make the change.
After you pass away, that family member can come back and point out that you were suffering from dementia at the time of the change. They can call into question for mental competence and question the validity of the will.
It will be hard to prove that you were totally sound of mind when you made the change, since you did experience bouts of “fuzziness” during that time. So, while it is an expensive and time consuming process, there is a chance the family member will win the dispute – and receive the inheritance you intended to withhold.
So, what can you do? Put a clear plan in place well ahead of time that details your wishes – when you still have sound mental health.
Here are some of the things you should talk over with a knowledgeable estate planning attorney:
Power of Attorney
Generally speaking, a power of attorney document gives someone else (called your “agent”) the legal ability to make important decisions for you. In Florida, it becomes effective immediately as opposed to other states where it takes effect when you stop being able to do so yourself.
By creating a power of attorney when you’re still thinking clearly and have the requisite mental capacity, you give yourself more control over your future by ensuring that the people you want deciding things for you have the legal ability to do so. It also reduces the likelihood of a contest, which avoids court time, and most importantly, attorneys’ fees and costs.
A few important things to know about a power of attorney:
- A traditional general power of attorney covers financial, legal, insurance and administrative matters. However, you can get make it as broad or as narrow as you desire. It is possible to create a power of attorney for just a specific piece of real property (real estate), for example.
- You should always name a successor agent – and possibly several in order. Basically, this means that you are listing the people you want to make decisions for you in order of preference. So, for example, your first choice might be your spouse. But if they are not able to handle the responsibility for whatever reason, it would fall to the next person you named. If nobody is named or there are no named people are able to serve, then the guardianship court will appoint someone on your behalf who you may or may not desire to serve in such capacity. This is wasteful and regrettable not to mention unpredictable.
- A power of attorney can be temporary or durable. In the context of estate planning, yu want a durable power of attorney. This means the document remains valid even after you lose the ability to make your own decisions. In other words, it survives incapacity. In other capacities, such as you’re out of the country, you may want someone to have a limited power of attorney for a specific time and purpose.
- Without a power of attorney, you will likely be appointed a guardian by the court. This means you will have little to no say over who gains control over your property and care.
Health Care Surrogate
A Designation of Health Care Surrogate authorizes somebody to make medical decisions on your behalf. If you do not designate someone in advance, Florida law will determine who will make decisions for you when you are unable to. That’s done through a guardianship proceeding, which is time consuming, expensive, unpredictable and humiliating.
By deciding now, you can make sure your health care surrogate understands your wishes, so he or she can make decisions in your best interests.
Florida allows for the designation to become effective now or upon your incapacity. If you would like it to be effective now, the health care surrogate must keep the principal in the loop and honor their wishes while they still have capacity.
A standard last will and testament details, among other things, how you want your estate to be divided and distributed after your death, i.e., who gets what. It also addresses final disposition and guardianship of minor children and appointing your Personal Representative (or Executor) to administer your estate in probate court. It is important to note that your Personal Representative has absolutely no authority while you are still alive.
Besides a standard last will and testament, you should also create a living will. This is a type of will that serves the very specific purpose of outlining the kinds of end-of-life treatment you want or do not want.
In order for this document to be effective, you need to make sure you prepare and sign it while you still have legal capacity.
While trusts are not necessarily for everyone, they are worth looking into as a way to protect your estate, ensure you get the care you need, designate who you wish to manage the trust instead of the court, and streamline the process of distributing your assets after you pass away.
Yes, trusts can do a lot. The downside of trusts is that they can be complicated. While consulting with a knowledgeable Florida lawyer is recommended for all of these suggestions, it is an absolute necessity to set up and manage a trust. Your attorney can look at your specific situation and advise you on the best way to set up your trust based on your goals, desires, and concerns.
Do not wait to protect yourself and your legacy – reach out to an experienced Florida estate planning lawyer today.
Barry E. Haimo, Esq.
Strategic Planning With Purpose®
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