USA July 25 2022

As parents age, their children may notice certain physical and behavioral changes. The most common physical decline is a parent falling more often, typically while walking up and down stairs or in the bathroom. Physical impairments can be rectified with canes and walkers, safety measures around the house and possibly medical alert buttons. However, a parent’s mental decline can be much harder to manage and to prepare for. Common examples of cognitive decline include forgetting basic information such as relatives’ names, leaving the stove on, or when a parent starts wandering off alone and getting lost. So, when cognitive impairment (such as Alzheimer’s) becomes evident, how does one protect both their parent and that parent’s estate?

Protection of the Person

Visit the Doctor

If you suspect your parent may have Alzheimer’s or other cognitive impairment, the first step is to bring them to a doctor. Your parent’s primary care physician will likely be able to advise you on general safety precautions and be able to rule out any major health issues. However, the primary care physician will not be able to adequately evaluate your parent’s cognition and should refer your parent to a specialist. A referral to a neurologist or another doctor specializing in neurology will be able to fully assess your parent’s capacity. One possible outcome is that the doctor could determine that your parent can still make thoughtful decisions related to their day-to-day life, such as their activities and travel, yet be slowing in their ability to direct and manage their own health decisions. This evaluation will give you a glimpse into your parent’s needs and will help you navigate their care.

Health Care Proxy

After the proper medical professional evaluates your parent, it may be determined that a health care proxy needs to be invoked. Hopefully, your parent previously established a comprehensive estate plan and appointed an available individual, such as you or another family member, to act. A health care proxy is an agent named in estate planning documents to make medical and health care decisions for the principal (your parent). A health care proxy typically does not begin to make medical decisions until the principal is deemed incapacitated but may be necessary when a parent can no longer make his or her own health care decisions.

If your parent named you their health care agent, it’s critical to read the fine print. The document may have language included regarding when to invoke the health care proxy – for example, your parent may require a determination of incapacity by two separate doctors. The health care proxy will likely include end-of-life planning and will help guide you when those decisions need to be made. Most importantly, a health care proxy typically appoints a guardian if the principal is deemed incapacitated or in need of a guardian. This paperwork will be vital if you need to pursue guardianship.

Guardianship

If a neurological evaluation determines that your parent has Alzheimer’s or another form of cognitive impairment, your parent does not automatically need a guardian. A guardianship is likely unnecessary if your parent is well enough to manage their day-to-day activity, is not causing harm to themselves, and has a valid health care proxy that may be used for medical decisions. However, in those situations where a parent is causing injuries to themself, is putting others in danger, or if there is no health care proxy, guardianship will help you protect yourself and your parent.

A guardian is a fiduciary responsible for making and overseeing personal decisions on behalf of an individual who is unable to manage their own affairs or make their own decisions due to incapacitation or being underage. A guardian’s powers include making decisions related to such a person’s support, care, education, health and welfare. It may be determined that your parent only needs a limited guardian and not a “full” or “plenary” guardian. A “full” guardianship generally removes all personal decision-making responsibility and authority from the incapacitated person. A limited guardianship allows the Court to address specific areas of incapacity and tailor the guardianship to meet an individual’s unique circumstances. Your parent may need a guardian solely to make his or her medical decisions but is able to live independently and manage their personal schedule. A guardianship is a court proceeding and will require you to file certain documents and adhere to certain fiduciary obligations. Read: I’ve Been Asked To Be a Guardian. What Do I Do?

Proper Care

The scope of powers granted in the health care proxy (if one exists), will determine how you can provide care for your parent. A health care proxy may allow for admission into a nursing home and may allow you to oversee medical care both in and outside of your parent’s home. The powers granted under guardianship are strictly statutory but generally allow for all decisions regarding support, care and welfare. Under guardianship, you cannot admit your parent to a nursing home or administer anti-psychotic medications without additional court oversight. You may use your power as a health care proxy or authority as guardian to make decisions related to your parent’s day-to-day care and protection, such as hiring home aides, establishing regular doctor’s appointments and managing medications.

Protection of the Estate

Joint Account Holder

If your parent has Alzheimer’s, you should also consider taking steps toward protecting their estate. As a result of their diagnosis, they may require assistance with bill paying or other financial management needs. One solution is for your parent to add you as a joint account holder to one of their bank accounts. Note: a common cause for litigation is when one sibling learns the other sibling was added to a parent’s bank account. Upon a parent’s death, the default rule is for that joint bank account to automatically pass to the joint owner. This could result in a possible disproportionate inheritance for one sibling and may go against your parent’s wishes. When a parent adds one child to a bank account, ensure the parent’s intentions are clear and in writing. If the parent wishes for that child to receive the value of the account at the parent’s death, the gift should be made in writing. If the parent wishes for that child to only be added to the account “for convenience purposes only,” such as for bill paying, make that purpose known in writing. A “convenience account” will not pass automatically to the joint owner.

Durable Power of Attorney

If proper estate planning was done, your parent presumably also executed a durable power of attorney document. A power of attorney is a written document that appoints an “attorney-in-fact” for a definite purpose, typically related to financial affairs. The individual for whom the attorney-in-fact is acting is the “principal” or, in this case, your parent. Similar to the health care proxy, if you are appointed as power of attorney, it is important to read the document and understand your powers. Examples of powers you may have: power to fund or amend a revocable trust; power to buy and sell real estate; power to invest or reinvest the principal’s money; power to contract; power to operate businesses owned by the principal; powers regarding retirement plans or other employee benefits; powers regarding bank accounts; and many more. You may use your authority as power of attorney to manage your parent’s finances, pay outstanding expenses, and preserve and protect assets. Read: Power of Attorney for my Incapacitated Parent – What Are Our Options?

Conservatorship

In the event your parent does not have an estate plan and needs assistance with their finances, a conservatorship may be necessary. Similar to filing for guardianship, you, as the petitioner, may also commence conservatorship proceedings to take control of your parent’s finances if they can no longer do so. A conservator deals with protecting the property and business affairs of a person needing protection, while the guardian manages the respondent’s physical well-being. A conservator is appointed to manage the property of a minor or an adult who, because of disability, cannot manage their own property, or has property that will be wasted or dissipated unless management is provided.

Conservatorship is likely unnecessary if your parent has a valid durable power of attorney in place. To grant a conservatorship, the court would need to find that, due to your parent’s “disability,” they can no longer manage finances and assets are at risk of being wasted or dissipated. If your parent previously arranged for the protection of their assets, such as creating trusts, appointing agents, and putting in writing their wishes, a conservatorship is likely not needed.

Conclusion

In the end, prior planning is the best way to protect your parent and their assets in the event of a devastating diagnosis. With proper instruments in place and adequate instructions provided to agents, your parent should be able to rest assured that they will be cared for both financially and personally.