Why June is a good time to examine estate plans through the lens of mental health
The Alzheimer’s Association says that more than 55 million people are living with dementia worldwide. In the United States the figure for Alzheimer’s alone is nearly 7 million, on pace to hit 13 million by 2050.
We all know someone whose mental capacity and quality of life have been or were diminished by this cruel disease. The Alzheimer’s Association offers guidance to recognize the early signs of dementia, the importance of early detection and diagnosis, and ways to approach loved ones with concerns about their mental health. The Association also offers support programs, educational programs, early-stage social engagement programs, a help line, and guidance for caregiving. And who couldn’t benefit from taking steps early to strengthen and protect our own mental health, as outlined by Community Health Centers.
June is “Alzheimer’s and Brain Awareness Month,” and is a good time to examine the topic of estate planning through the lens of mental health. In this blog, we will touch on some of the safeguards that can be observed in an effort to keep estate plans on track and avoid finding oneself embroiled in a long and protracted battle in probate court.
Estate Planning and Execution Challenges
The emotional toll these conditions take on individuals and families may be inevitable, though there are strategies to reduce them. While a dementia diagnosis may not necessarily make estate planning impossible, early and proactive planning is essential to ensure that the wishes of individuals are respected and that they and their loved ones are protected.
Dementia can complicate estate planning in several ways. A common challenge is determining when an individual is no longer legally competent to sign documents – an important but extremely delicate determination that should be ascertained by well-trained medical professionals. Diminished capacity can lead to questions about the validity of the estate plan and increase the risk of allegations of undue influence and coercion of the testator.
Carrying out an estate plan can also be complicated by dementia. Disputes over testamentary capacity can arise, leading to conflicts among family members and heirs. The likelihood of litigation and contested wills or trusts increases when there were questions about the individual’s mental capacity at the time documents were signed.
Mitigating the Impact of Dementia on Estate Plans
Mental Capacity Assessments
If a parent or loved one is diagnosed with Alzheimer’s or dementia, it is essential to have their mental capacity verified by a qualified healthcare provider before proceeding with any estate planning. This verification ensures that the loved one understands the nature and consequences of the decisions being made. If someone with Alzheimer’s or dementia attempts to create an estate plan without medical validation of their mental capacity, their plans could be invalidated if it is determined that they lacked capacity at the time the documents were executed. An ounce of prevention is worth a pound of cure in this scenario, as disputes of this kind often lead to very protracted and expensive litigation that requires hiring expert witnesses.
Conservatorships and FPAs
It is important for families and planners to understand the meaningful role of conservatorships and financial powers of attorney. If a loved one is no longer able to make their own decisions due to cognitive decline, a conservatorship may be necessary. This legal proceeding allows a court to appoint someone to make decisions on behalf of the loved one, including managing finances and healthcare decisions.
Conservatorship proceedings can largely be avoided with adequate estate planning. So long as your loved one has a valid financial power of attorney and healthcare directive in place, a conservatorship is likely not necessary. A power of attorney authorizes a trusted individual to act on the loved one’s behalf. The power of attorney documents must be executed while the person is still competent, otherwise the family could face protracted conservatorship proceedings and disputes if members of the family disagree about who would be best to serve as the conservator.
Irrevocable Life Insurance Trusts
Incorporating incapacity planning into estate planning strategies is also an important consideration. This includes setting up trusts such as an Irrevocable Life Insurance Trust (ILIT), which can provide tax advantages and ensure that assets are managed according to the individual’s wishes.
Regular Updates
Finally, regularly reviewing and updating beneficiary designations and other estate planning documents can help avoid complications and ensure that the estate plan remains aligned with the individual’s current wishes.
Conclusion
Estate planning is not just about the transfer of wealth. It is about dignity, clarity, and care. Dementia adds urgency and complexity to the process, but with thoughtful planning families can avoid conflict and protect their loved ones. By recognizing the signs of dementia, addressing it with empathy, and working with trusted advisors, individuals can ensure that their wishes are respected, that their estate plans are executed smoothly, and that they are cared for should their condition worsen.
