It can be quite a stressful experience dealing with your parents’ legal and financial decisions if they lose their mental capacity. Therefore, it is important that things are taken care of before any major disaster or illness. My father is still mentally capable, he still maintains his status as the responsible party in his and my mother’s affairs. However, in the unfortunate event that my father passes before we are unable to establish a Power of Attorney, we could be in for a big headache.
Here are a few strategies to consider:
It is a difficult subject to bring up because many elderly people want to maintain their independence. It’s up to you and your family to decide whether the time is right to bring up this discussion. You’ll have to monitor your parent to make sure they are still capable. When you notice a decline in their judgment or cognitive abilities, is when it is especially important to bring this issue up. Try not to approach them as if they “have to” do anything, but rather that it is a good idea to consider it for everyone’s sake. Be patient about allowing them to make this decision on their own.
Wills
What is a will? It is a legal document that states where or to whom a person’s assets will be left to after his or her death. The person signing the will must have the mental capacity to do so. There are different methods of drawing up a will.
- Wills can be hand-written by an individual who must sign and date it.
- Use legal software
- Use an attorney.
The assets included in the will are given out after a court-supervised process called a probate. Probate transfers a person’s assets to whomever is specified in the will. Probate court charges fees for this service which are taken directly from the assets before they are given to the recipient.
A person can change their will at any time. He/she will does not need to disclose that to anyone, and the will should be kept in a safe place.
If the will isn’t completed before a person still has the mental capacity to do so, the community assets (assets acquired during a marriage), will be given to the spouse. If there is no spouse, community assets will be distributed to the children. Separate assets will be distributed to the spouse and other relatives. If for some reason, there is no family, the assets will be given to the state.
Check with your local senior advocacy center on free services to help you with this.
Trusts
A revocable living trust is a legal document that allows a person to specify what will happen to their assets while they are still living, incapacitated or after they die. They have the right to change or revoke that trust as long as they are still alive.
The trust is set up in a way that the assets listed in the trust are “owned” by the trust. The grantor, (individual with assets in the trust) can arrange 2 things:
- act as trustee and manage his or her own trust
- Have an outside person or organization act as a trustee.
A successor trustee should be chosen to manage the trust if the original trustee is incapacitated. More than one successor trustee should be chosen in case the first loses capacity. Since the assets of the grantor are in trust, it avoids probate court.
Advanced Health Care Directive
An advanced health care directive allows persons to make their care decisions before they become incapable of making these decisions on their own.
In the directive, procedures and treatments are listed that a person can include or refuse in any situation. Another term used for the Advanced Health Directive, is the Durable Power of Attorney.
The directive can choose an “agent”. The agent makes decisions about an individual’s health care treatments when the individual loses capacity to do so.
Power of Attorney:
There are 3 types of Power of Attorney which are listed below.
- 1. General Power of Attorney: A legal document that gives an agent the financial rights of the person signing the document. If this document is signed when the person doesn’t have the mental capacity to do so, it is void. If they become incapacitated, it becomes void.
- 2. Durable Power of Attorney: It works the same way as the general, but it doesn’t lose power after someone loses capacity.
- 3. Springing Power of Attorney: This gives the recipient the rights of an individual only after he/she is incapacitated.
All types of Power of Attorney can be limited in the scope of rights.