For family members, the warning signs can be hard to spot, and the person may even try to hide them. There may be confusion over regularly performed tasks, forgetting to pay a bill or missing a meeting. According to the Taunton Gazette’s article “Preparing for complications associated with aging,” family members must keep their eyes open for clues, including lapses in judgement about financial matters, like sending money to a phone call scammer, or changes in behavior.
A conversation should be part of estate planning or when talking about regular financial planning. Address the potential problems, while parents still have mental capacity. As soon as any warning signs are evident, the time frame for preparedness needs to speed up.
When discussing the estate plan, several documents are used to prepare for cognitive impairment. In addition to a last will and testament, the estate plan needs to have a health care power of attorney and a durable power of attorney.
A Health Care Power of Attorney is a legal document that gives caretakers, usually an adult child, and sometimes a trusted friend, the legal ability to speak with health care providers about medical treatment. These documents need to be kept current so there are no obstacles to their use. Every three to five years, they should be updated, or as circumstances change. Without them, the caretaker won’t be able to have a conversation with a loved one’s doctor regarding any health issues, including cognitive impairment.
A Durable Power of Attorney allows another person, who is called the “agent,” to handle almost everything in your life. This should be current, since many banks and financial institutions will balk if they are handed a POA that is more than five years old – sending it to their legal department and holding things up while they await an answer.
Cognitive impairment is an important reason many aging adults rely on trusts. Unlike assets held in an individual’s name, assets owned by a trust can easily be managed by a trustee. If you’re the trustee and become mentally incapacitated, your chosen back-up trustee can manage the assets. The trustee needs to be someone you trust who is willing to take on this task.
One of the challenges of cognitive impairment is transferring the management of a person’s assets and their health care decisions to someone who is not impaired. The aging parent may be very good at hiding their disability, and they can often mislead family members for extended periods of time.
One unusual and creative idea: create a “disability panel” or “disability board of directors”— a group of family members, friends, or beneficiaries who decide if the loved one needs help. This is far easier than relying on doctors to declare incompetency or needing to apply to the court for guardianship when you show signs of cognitive impairment.
Your estate planning attorney will be able to help you prepare for the challenges of aging by creating a plan for incapacity as part of your overall estate plan.
Reference: Taunton Gazette (July 12, 2019) “Preparing for complications associated with aging,”
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