Estate Planning Considerations For Those With Dementia

Estate planning is important, but even more so for affected by dementia or similar conditions. Upon diagnosis, it's essential to prioritize finalizing an estate plan promptly in order for your loved ones to actively participate in the process. In this post, the estate planning attorney at Thompson Legal discuss the sensitive nature of estate planning for individuals affected by this diagnosis and the special considerations they face.

Note that this post is not exhaustive, and every situation is unique. It is always advisable to speak with an estate planning attorney before execution of any documents. Contact Thompson Legal to schedule a discovery call with a Michigan estate planning attorney today.

What is Dementia?

According to the Alzheimer’s Association, dementia is a term used to describe diseases and conditions characterized by a decline in memory or other thinking skills that affect a person’s ability to perform everyday activities.  Symptoms can range from mild to severe, affecting an individual's decision-making abilities and necessitating careful estate planning considerations.

Testamentary Capacity

Testamentary capacity refers to the mental state required to create a valid will and estate planning documents. Even individuals with dementia may possess testamentary capacity if they understand the significance of legal documents at the time of execution, allowing them to make informed decisions regarding their estate.

Michigan law finds that a person has sufficient mental capacity to execute a Will if:

(a) The individual has the ability to understand they are providing for the disposition of their property after death.

(b) The individual has the ability to know the nature and extent of their property.

(c) The individual knows who their surviving heirs are, and 

(d) The individual has a reasonable understanding of the general effect of signing the Will.

Similarly, a person executing a power of attorney or patient advocate designation must also have capacity at the time the document is signed. If an individual with dementia meets this criterion, they have the capacity to execute their will and power of attorney documents.

Estate Planning Considerations

Planning ahead with a thorough estate plan is key to ensuring the individual's wishes are honored. Creating an estate plan early allows for the designation of decision-makers and the management of assets according to the individual's preferences, alleviating the need for costly and emotional court proceedings. Some estate planning tools for affected my dementia include revocable living trusts, power of attorney, and guardianship and conservatorships. 

Revocable Living Trust

A revocable living trust allows individuals to transfer ownership of their assets to the trust while retaining control during their lifetime. This ensures that even if they become incapacitated due to dementia, a designated trustee can manage their financial affairs according to their wishes outlined in the trust document. Given that a trust is already established and managed by a trustee, there may be no need for future court intervention.

Power of Attorney

A power of attorney is another critical document for individuals expecting to be affected by Dementia. There are several types, including financial, medical, and limited, offering varying degrees of decision-making authority. Powers of attorney allow for key parties to communicate with providers and make decisions on a persons behalf should they no longer be able to do so. 

Guardianship and Conservatorship

If a person lacks the capacity to execute estate planning documents, seeking a Guardianship and/or Conservatorship may become necessary. These legal proceedings involve a probate judge appointing a fiduciary to make medical decisions on behalf of a protected person and to manage the individual's affairs, particularly in cases of advanced dementia or incapacity. These proceedings require on going court oversight and annual reporting.

Conclusion

Individuals affected by dementia are still able to participate in estate planning with careful consideration and legal guidance. By understanding testamentary capacity and the applicable estate planning tools, individuals and their families can navigate the complexities of estate planning with peace of mind. If you or a loved one is facing dementia, Contact Thompson Legal to speak with an experienced estate planning attorney.

This blog is for informational purposes only. It is not intended as legal advice. In the event you would like to speak with an estate planning attorney about your case Contact Us at (734) 743-1646 to schedule a consultation.