Skip to content

Planning for Your Financial Future After an Alzheimer’s Diagnosis

The incidence of Alzheimer’s disease is rising – according to the CDC, nearly 6 million people suffer from Alzheimer’s disease, and that number is expected to rise to 14 million by 2060.  If you or a loved one has been diagnosed with Alzheimer’s disease, it can be difficult to think about things other than the day to day, but it is also important to take steps and ensure appropriate legal documents are in place to prepare for your financial future.

Alzheimer’s disease is a disease that affects the brain and slowly destroys the memory, making it one of the leading causes of dementia. Overtime, this affects one’s ability to do everyday tasks. In most cases, symptoms often appear in individuals in their mid- 60s, though early onset Alzheimer’s can be seen in some individuals in their 30s. This disease also lowers one’s life expectancy: someone diagnosed with Alzheimer’s can be expected to live anywhere from 3-10 years depending on the person’s age at diagnosis.

Since Alzheimer’s deteriorates the memory over time, it can be difficult to think clearly and make the right decisions. For an individual battling dementia, there are a few important aspects to consider about your long-term choices:  health care planning (including end-of-life planning), financial planning, and long-term care planning.

Health Care and End-of-Life Planning

Health care planning involves a few documents: a Health Care Power of Attorney, a Living Will, and a HIPPA Release.  A Health Care Power of Attorney (also referred to as a Health Care Proxy) is the document where you name someone (along with an alternate) who will have the authority to make medical and health care decisions for you when you are no longer capable to do so.  A Living Will is a document where you can provide guidance and direction to your health care agents about what kind of care you would want, including providing direction about end-of-life care and decisions to terminate life support.  And a HIPPA Release is the document where you specifically authorize your medical providers to release your health information to your agents (and others, if you wish).

Another document that can be very important for health care planning is a MOLST, which stands for Medical Order for Life Sustaining Treatment.  A MOLST is a document that you would complete with the assistance of your doctor, and it provides legally binding medical orders regarding the provision (or withholding) of life sustaining treatment in emergency situations.  In essence, the MOLST would allow you to decide, in advance, whether or not medical providers should take steps to resuscitate you if that was needed.

While not specifically health care planning, you may also decide to undertake advance planning for your burial or funeral services, by speaking with a funeral home or church about your wishes, and possibly pre-paying for these services or creating a burial trust to help cover those costs.

Financial Planning

While everyone over the age of 18 should have a Durable Financial Power of Attorney (DFPOA) in place, this is especially important for someone diagnosed with Alzheimer’s.  A DFPOA is a document that authorizes an agent to make decisions and take actions on your behalf in relation to financial decisions and accounts and real estate at times when you are no longer capable to do so.  It would allow, for example, your agent to access your bank or retirement accounts, or to finance or sell your home, or to speak with insurance companies regarding policies (including long-term care insurance policies) that you have in place and need to draw from.

A Last Will and Testament (or Will) is a document that governs how (and to whom) your estate will be distributed after your death.  A Will does not “avoid probate” – if you have a Will, your executor and heirs will still need to go to Probate Court – but it does provide the roadmap for how your executor should handle your estate, about which they will have to report to the Probate Court when completed.  While a Last Will and Testament is something that almost all people need, it is especially important for someone who has been diagnosed with Alzheimer’s because it is not something that can be created by your agents if your condition worsens to the point that you’re not competent to execute a Will.

A trust is a document that creates a relationship between you (as the trustmaker) and a trustee, for the purpose of holding and governing assets of yours.  There are many different types of trusts because they are used for many different types of purposes, but the most common benefit of a trust is that it allows the trustee to manage any assets in the trust if you become incapacitated (the Durable Financial Power of Attorney would be used for any assets not in the trust).  Additionally, any assets in a trust are not subject to the probate process (i.e., they do “avoid probate”) because those assets are owned by the trust, and not you, on your death.  Finally, some trusts (properly designed and managed) can protect your assets against future costs related to the very high costs of long-term care.

While not legal documents, it is also important to make sure that your other advisors (such as financial planners and accountants) are made aware that you’ve been diagnosed with Alzheimer’s.  It will be necessary to get their advice as to how best to plan for the financial implications of your condition, and the need for some future care, and to have a clearer understanding of where those funds will come from.  It’s also helpful because it will give you a chance to introduce your advisors to the agents that will be making decisions for you when you are no longer capable to do so, which will make for a much smoother transition as your condition worsens.

Long-Term Care Planning

                If you’re diagnosed with Alzheimer’s or any other form of dementia, it’s also important to begin discussing options and plans for the long-term care that will likely be needed.  Depending on your circumstances, care may be arranged for at home, or (especially as your condition worsens) in a care facility specially designed for those with memory and dementia issues.  Some considerations will include whether family members are capable of helping with your care and to what extent they can be counted on without creating too much stress to them; what financial resources you may have available to pay for in-home care; what steps have previously been taken to protect assets of yours against the costs of a long-term memory care facility; and when an application to Medicaid for assistance in paying for these costs might be appropriate.  Discussions with your medical providers, estate planning attorney, and financial advisors, will all be necessary.

Currently, there is no cure for Alzheimer’s and related dementia. It is important to ensure the appropriate documents are in place so caregivers and family can make decisions and follow the wishes on the person’s behalf, ensuring the person is comfortable, and receiving quality care that provides the best quality of life possible and may even help in extending their life expectancy.