Planning can ease burden of dementia
Better safe than sorry
As Americans age, dementia is becoming more widespread—and expensive. By planning ahead, you may be able to help ease the burden.
As our population ages, dementia is rapidly growing in prevalence with around 4.1 million Americans disabled by it in 2013. The U.S. Census Bureau estimates that Americans age 65 and older will double to about 72 million over the next 20 years. Rates of dementia, which is a loss of brain function that affects memory, thinking, language, judgment, and behavior, increase with age, and unless a cure or new treatments are found, costs from dementia could come close to doubling by 2040, as the aging population increases and assuming the rate of dementia remains the same. The disease is not only debilitating, it’s also expensive. Alzheimer’s Disease, one of the more severe forms of dementia, costs families and society $159 billion to $215 billion yearly, according to a new study by the nonprofit Rand Corp which was published in the New England Journal of Medicine in April 2013. Those costs include drugs, medical treatments and the costs associated with day-to-day living and they top or equal the costs for other diseases like heart disease and cancer.
Based on those stats, it’s important you consider making an estate plan before you or a loved one is affected by the disease.
The following are some important points to help guide you through the process.
Who should plan?
When should I begin planning?
Dementia affects one’s ability to think clearly and participate meaningfully in decision making, which makes early legal, estate planning even more important. Strive to get an estate plan in place as soon as possible, while you and your loved one is still of sound mind. If you wait until signs of dementia start showing, the estate plan could be invalid because the person wasn’t of sound mind.
Advance planning can help people clarify their wishes and make well-informed decisions about health care, financial and property arrangements.
Who should I ask for help?
Since laws vary from state to state, everyone’s situation is unique, and there are several legal documents that need to be prepared, please consult a qualified estate planning or elder-care attorney.
What steps can I take to prepare?
In general, you can prepare for estate planning in seven easy-to-follow steps:
- Create a hard-copy document that includes all the information that someone might need about you in case of an emergency. Also, include contact information for your medical, financial and legal advisors. Make sure that your loved ones know where this information is and that it is easily accessible. If you put it on your computer, make sure a loved one knows the password to access it.
- Collect and organize all your financial information and store in a secure place. This should include basic information about your income, property, investments, insurance, and savings. As many people today maintain their accounts online, it may be best to create one document with basic information including account numbers, account management and customer service contact information. Tell a trusted family member, friend, or professional advisor how they can access this information.
- Designate a person to handle your financial and legal issues by creating a “power of attorney” or more specifically a “durable power of attorney for finances.” This legal document names someone to make financial decisions or execute instructions based on existing directives when you or a loved one no longer can. This important step prevents having to have state courts take action and possibly seize control of financial affairs from your family.
- Ask your attorney to create advance directives for financial and estate management. This must be created while the person with dementia still can still determine what should be done. These directives usually include four basic documents:
- A health care proxy that empowers someone to make medical decisions.
- A living will to communicate health care wishes.
- A will that determines how a person’s assets and property should be distributed upon death, custody of minor children, and funeral and/or burial arrangements.
- A living trust to determine how assets should be managed during disability, illness and/or incapacitation.
Is there anything else I need to consider?
As with all long-term planning, it is important that you review estate plans over time. Any changes in situations such as divorce, relocation, a death in the family, as well as state laws, can affect the outcome of how estate plans are interpreted and executed.
This article is for more information purposes only. Please consult your medical professional for information to your situation. For information about planning for Alzheimer’s visit the National Institute on Aging’s page about Legal and Financial Planning for People with Alzheimer’s Disease Fact Sheet.
Neither New York Life Insurance Company, nor its agents, provide tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions.