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6. A trusted person needs the power to act. The distinguishing and most disturbing characteristic of Alzheimer’s, and all other dementia-related illness, is the gradual loss of ability to act on one’s own behalf. Because this is not a question of “if,” but rather “when,” it’s absolutely essential that you appoint an agent to make decisions and take appropriate actions for you, when you no longer can.
Central to all effective Elder Law planning is the appointment of this agent through a Durable Power of Attorney. For the types of strategies discussed here, a “standard” Power of Attorney is insufficient. Your Power of Attorney needs to be comprehensive enough for your agent to make decisions and take the necessary actions to protect you, your money and your property. For this reason, a Durable Power of Attorney that is broad in scope is essential.
David Cutner discusses the Durable Power of Attorney Document in this video. He explains how essential it is to an effective Elder Law Planning strategy.Click here to watch video!
Please see 25 Strategies to Prevent Financial Ruin from Long-Term Health Care Costs for a thorough discussion of how this document is used in Elder Law planning. Here we want to address a couple points that are of particular relevance to Alzheimer’s and dementia clients.
If you don’t have a Durable Power of Attorney, you will impose a costly and time-consuming burden on your family. They’ll have to petition the court for the appointment of a guardian. Your fate will now be determined by a judge, who’ll select the person to handle your most critical and intimate personal and financial decisions. That person may not even be a member of your family and could be, for instance, a court-appointed attorney. If for any reason you or your relatives don’t enjoy a good rapport with the guardian, you will have to face an additional expensive and exhausting court proceeding to try to make a change.
Here’s an example of why it’s so important for your agent to be able to legally act on your behalf. In one case, our client had significant pension income of her own, as well as from her late husband. In her later years, she developed Alzheimer’s disease, which caused her to lose her memory and become completely unable to deal with ongoing obligations in her daily life. She fell behind in payment of her income taxes to the point where she received a Final Levy from the IRS, even though she had ample resources from which to pay her taxes.
Because we had earlier prepared a Durable Power of Attorney that contained the necessary scope of powers, our client’s niece was able to take appropriate steps to protect her aunt.
We helped the niece to satisfy her aunt’s tax obligations, drafted all the necessary documents, and protected remaining assets and income by creating two special trusts. As a result, our client was able to remain in her own home at the standard of living to which she was accustomed. Without these steps, she would have been subject to Medicaid’s spend down regulations, and lost almost every financial resource she had acquired over a lifetime of work.
Keep in mind that a Durable Power of Attorney gives your agent the immediate ability to make decisions on your behalf, which is a significant advantage if your illness takes a sudden turn for the worse. The agent’s authority to act on your behalf will continue through and after the point you become mentally incapacitated. However, you need not give the document to him or her until you feel ready, thereby preserving a measure of personal control over your own affairs until you’re no longer able to handle them.
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