Receiving a diagnosis of Alzheimer’s disease may be even more devastating than learning that one has cancer. Cancer can often be cured. Alzheimer’s, with the inexorable decline into dementia, cannot. Although we often think of Alzheimer’s as disease of old age, 200,000 of the 5 million Americans with the disease are under age 65. In fact, our law firm recently dealt with two people who developed early onset Alzheimer’s, one at age 60 and the other at 51. In both cases, we fortunately had sufficient time to put their estate plans into proper order.
As emotionally difficult as it is, people with impending cognitive impairment and their families need to deal with estate planning issues early, while the person has sufficient mental capacity to understand the issues and make intelligent decisions. This is the first in a 2 part series of blog posts in which I discuss the 6 vital estate planning steps Alzheimer’s patients and their families need to take as soon as possible after diagnosis. Doing so will give you and your family increased security at a time of ever increasing stress and insecurity.
Estate Planning Tip #1: Make a complete list of assets and how they are owned
With increasing memory loss, there is a heightened risk of having assets “disappear.” This problem can arise even in the early stages of Alzheimer’s. Have you ever noticed the “unclaimed property” list that’s published in the newspaper? Assets often become unclaimed because the owner simply forgot about them. This problem of assets disappearing is especially acute in the digital age, with banking and brokerage accounts increasingly being managed, and more and more people storing their information online.
When probate lawyers settle an estate, we always look at the unclaimed property lists for each state where the person lived. Although most of the items we find have only nominal value, we sometimes are pleasantly surprised by “bonanzas.” Here are some of the reasons why things get on the list:
- Forgetting to claim security deposits
- Dividends, insurance proceeds or inheritances going to a prior address
- Forgetting about a safe deposit box
- Letting a CD roll over for several years and ignoring bank correspondence
As soon as possible, prepare a thorough list of everything the person owns, including life, health and long term care insurance policies.
Banks and brokerages encourage people to go “paperless” but where the only record of asset ownership is a contrail in the digital cloud, significant value can disappear. You may want to contact the financial institution and request printed statements. You should obtain them from past years to make sure that everything is in order. You also should obtain income tax returns for the past three years. When probate lawyers settle estates, we always review tax returns because, by listing sources of income, they help us to uncover otherwise unknown assets.
You need to have access to all online user names and passwords and know the rules that apply to various financial institutions. Do they accept powers of attorney? If so, do they insist on their own forms or specific language? You also need to find out whether assets are owned by the individual, in joint names with any other person or are in an IRA, 401(k) plan or other retirement vehicle.
Estate Planning Tip #2: Review all estate planning documents with the person
It is important to review all estate planning documents, including wills, trust agreements and beneficiary forms early while the person can engage in dialog with his or her advisors. Here are some of the issues to consider in estate planning reviews:
- Can we simplify the documents because the person may no longer need estate tax planning?
- Conversely, should he or she do estate tax planning and, if so, is there enough time to implement tax saving techniques?
- Examine all beneficiary designations for life insurance and retirement plans. This is especially important if he or she has been divorced.
- Are there any changes in his or her family, such as divorce, death, marriage, birth or adoption of a child or grandchild?
- Are his or her children mature and responsible enough to receive their inheritances outright or do they need the protection of a trust?
- Is it likely that the decedent’s assets will end up in the hands of his or her in-laws or their families?
Estate Planning Tip #3: Put recurring bills on auto pay and designate third party recipient
All recurring bills should be put on “auto payment” with the bank. A spouse or other family member should be designated to receive copies of life and health insurance premium notices so you can ensure that premiums don’t lapse and insurance policies are canceled.
I recently worked with a man who had simply thrown all of his mail, unopened, into a cardboard box. Suppose that he had discarded bills and notices for a long term care policy. The contract would have been cancelled, most probably without the ability to reinstate it. He would have had use his own resources to pay his medical and nursing home expenses and all of his premium payments would have been wasted.
In Part II
In the next post on estate planning tips for people diagnosed with Alzheimer’s, I discuss the merits of a Trust versus a Power of Attorney, the benefits of transferring assets to the other spouse and what to do if you’re concerned the Will may be challenged.
If you have any questions about anything in this article or want to discuss estate planning, please give us a call. Our TrustLawyer team is here to help you. Our phone number is 860-257-4330.