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Estate Planning for Family Caregivers

Talking to family members about estate planning can be challenging, but it is crucial to ensure their legal, financial, and medical wishes are documented, especially if they are experiencing dementia.

Reviewed by
Kate Grayson

Talking to your family members about their estate planning can be difficult. “You might not want to think about the day they are no longer here, or even consider that they might experience a decline in health that severely limits their ability to think clearly or communicate with you,” as The Balance Money explains. However, it’s important that your care recipient gets their legal, financial, and medical wishes documented as soon as possible, especially if they are experiencing early stages of dementia or memory loss.

Today we’re taking you through the basics of estate planning – the act of creating your legal, financial, and medical directives. 

This article will share what caregivers need to know about estate planning. 

What is an Estate Plan and Why Do You Need One?

Estate planning is a part of aging and having this conversation with your family financial advisor or powers of attorney gives many aging individuals a great deal of comfort. AARP shares that “an estate plan allows you to plan for the future. You can create the legacy you want to leave, ensuring your family is protected well into the future. Without these documents, the laws of your state will determine how your assets are divided after your lifetime. This may leave out people and organizations that are important to you.”

What is a Will?

A will is a legal document that outlines how your care recipient’s assets will be distributed after their death. They can choose who will inherit what assets (called the “beneficiaries”), and who is responsible for managing the estate (called the “executor”). If your care recipient passes away without a will, they will lose the right to dictate how their assets will be distributed. Without a will, their estate will be managed according to their state laws, not according to their own wishes.

What is Financial Power of Attorney

A durable financial power of attorney grants somebody (called an “agent”) the power to make financial decisions on your care recipient’s behalf, should they become incapacitated. Financial powers of attorney allow the agent to continue paying an individual’s bills and managing their financial affairs, if they are unable to do it themselves.

This can be especially helpful in cases of cognitive decline or for people with dementia. As a caregiver, it’s natural for you to help your care recipient with their medical and financial affairs. However, without the proper documentation and legal authority in place, you could be putting yourself at legal risk. If your care recipient would like your help managing their affairs, ensure they put the appropriate documentation in place.

What is an Advance Directive?

An advance directive is a legal document that spells your care recipient’s healthcare preferences and proxy, and is looked to for direction in the event that they become incapacitated or unable to make their own medical decisions. There are two components to an advance directive: a medical power of attorney, and a living will. Together, they dictate how an individual would like their medical care to be handled at the end of their life.

A medical power of attorney legally assigns somebody (often called the “healthcare proxy”) to make medical decisions on the patient’s behalf, should they become incapacitated. 

A living will is a legal document that spells out what medical interventions or treatments the patient would or would not want at the end of life. In addition to dictating treatment plans for physicians, the living will can guide the medical power of attorney’s decision making by articulating the patient’s wishes.

What is a Trust?

A trust is a legal entity that can own property or assets, often on an individual’s behalf. The trust is managed by a “trustee,” for the benefit of the “beneficiaries.” This allows people to transfer assets out of their own name, and into the trust, thereby creating a legal separation. If your care recipient needs help managing their finances, a trust could be a great solution. It can give your care recipient a great deal of comfort, knowing that their assets are being managed and protected.

What to do if your loved one has early stages of memory loss?

If your care recipient has cognitive decline, try and get their estate documents in order before the condition progresses. When somebody is newly diagnosed with dementia, we recommend having financial conversations early and often. The National Institute on Aging advises that advance directives and estate documents “must be created while the person with Alzheimer's or a related dementia has “legal capacity" to make decisions on their own, meaning they can still understand the decisions and what they might mean.” This is intended to protect the individual with dementia from elder abuse, and ensure that all decisions are being made according to their wishes. 

Learn more about managing finances for people with Alzheimer’s here.

Getting Started

While there are many free or affordable online services that your care recipient can use to create their estate documents, it is always a good idea to work with an estate or eldercare attorney if possible. An attorney can work directly with your care recipient to document their wishes, providing you and your family with valuable peace of mind.

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