As Americans age, dementia is becoming more widespread—and expensive. By planning ahead, though, you may be able to help ease the burden.
As our population ages, dementia is becoming more prevalent. An estimated 4 million to 5 million Americans currently have dementia.1 The US Census Bureau estimates that more than 12 million Americans will be age 65 and older by 2030.2 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 number of older Americans increases. The disease is not only debilitating; it’s also expensive. The direct costs of caring for those with dementia to American society in 2018 was an estimated $277 billion.3 Those costs include drugs, medical treatments, and assistance with day-to-day living, and they top or equal the costs of other diseases like heart disease and cancer.
Based on those stats, it’s important that 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 and estate planning even more important. Strive to get an estate plan in place as soon as possible, while you and your loved one are 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.
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:
1. 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.
2. Collect and organize all of your financial information and store it 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 this information can be accessed.
3. 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.
4. Ask your attorney to create advance directives for financial and estate management. This must be created while the person with dementia can still determine what should be done. These directives usually include four basic documents:
5. Ensure that that insurance coverage is in order and that beneficiary designations have been properly filed.
6. Consider creating a heritage document that passes the intangible wealth you or your loved one has gained over a lifetime. This could be in the form of a letter to loved ones, a collection of photographs or mementos, or simply a document that conveys values or life lessons to heirs.
7. Finally, make sure that estate and financial plans are shared with pertinent advisors, family, and friends. This will make it easier for those involved, when and if there is an onset of dementia that requires quick decisions.
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 situation, such as divorce, relocation, or 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 informational purposes only. Please consult your medical professional for information on your situation. For information about planning for Alzheimer’s, visit the Legal and Financial Planning for People with Alzheimer’s Disease Fact Sheet page on the website of the National Institute on Aging.
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.
1Gina Kolata, “Dementia Rates Are Dropping Even as Population Ages,” New York Times, November 22, 2016.
2Jennifer M. Ortman, Victoria A. Velkoff, and Howard Hogan, “An Aging Nation: The Older Population in the United States,” US Census Bureau, May 2014.
3Angela Stringfellow, “Demential Care Costs by State: An Overview of Costs, Types of Dementia Care, and the Cost of Dementia Care by State,” Caregiver Homes, June 28, 2018.