Estate Planning For Parents With Dementia

estate planning for parents with dementia

In a perfect world, everyone’s estate plans would be in order before being diagnosed with any life-altering conditions like dementia. If that hasn’t happened, a diagnosis like dementia should automatically trigger a review of any existing estate plans, or families should contact a local estate planning attorney for support. 

Protecting Parents with dementia’s Assets With a Solid Estate Plan 

Comprehensive estate plans automatically account for scenarios just like yours, establishing who will be the durable power of attorney and a detailed advanced medical directive.  

If those aren’t a part of your parents’ current plan, or they don’t have an estate plan in place, here are the things you’ll want to consider to protect their assets and establish a long-term memory care plan. 

In the meantime, we recommend you take a few steps to protect your parents’ finances and support their journey by: 

  • Scheduling automatic payments for their bills to reduce the chances of financial miscalculations, late payments, or missed payments that result in penalty fees 
  • See if they’ll agree to pre-paid debit cards that prevent them from going over daily spending limits 
  • Signing them up for free credit reports to watch out for financial “red flags” 
  • Establishing safe transportation services so they aren’t at risk behind the wheel 

Making these changes isn’t easy, but the conversation and collaboration between you, your parents, and other close family members pave the way for estate planning for parents with dementia. 

Start with the Durable Power of Attorney (DPOA)

People with dementia are highly vulnerable, and their estates can hemorrhage faster than you can imagine via well-meaning donations to every charity under the sun. Then, sadly, there is also the threat of fraud, often at the hands of people your parents knew and trusted. 

Establishing who the durable power of attorney will be is the best way to secure their financial future. This person has complete control of the finances, so choose wisely and carefully. While many families feel it’s best to have the DPOA be someone in the family, this isn’t always the case.  

This role can be assigned to anyone who is 18-years old or older – relative or not. A DPOA can be a trusted family friend (who may be more objective), or it can be a professional fiduciary. You can even assign two people to share the role for the security of “checks and balances.” If you go that route, the two people must respect one another and work well together. 

Visit our post Why Your Estate Plan Needs a Durable Power of Attorney to learn more. 

Complete Health Care Directives ASAP

In most cases, a dementia diagnosis occurs while adults still have a significant level of big-picture executive function. If that’s the case, your parents and family must discuss the estate plan – especially the DPOA assignment and detailed health care directives – also called advance medical directives – as soon as you can. This is the only way to ensure your parents’ wishes are honored instead of having to guess and make decisions for them. 

Advance health care directives consider things such as: 

  • Assigning the health care power of attorney (this is like the DPOA but for the medical realm. S/he is the one who will have the ultimate final say about medical treatment with the support of the instructions printed in the medical directive) 
  • When to resuscitate and when to activate Do Not Resuscitate (DNR) instructions 
  • Plans for end-of-life care (decisions around comfort care and which procedures they want as well as which procedures they do not wish to have performed) 

We recommend families complete this paperwork together. Life is unpredictable, so having your medical directive in order could be one of the best gifts you ever give to your loved ones if something unexpected happens to you or you are incapacitated in some way. 

Establish a will or a living trust

Your estate attorney will help you decide which makes the most sense for your parents. In most cases, we recommend drawing up a living trust. These documents help to minimize the amount the estate, its heirs, and beneficiaries have to pay in fees. A living trust will also simplify things after your parents die because they keep the estate out of probate. 

Whether you decide to create a will or a living trust, you’ll need to choose a trustee – the person who will settle the estate per the will/trust and California estate law. Sometimes the trustee or executor is the DPOA. Sometimes families choose someone else with the idea that the DPOA has done a good deal of work for the years leading up to the death of the last remaining parent. To prevent burnout, someone else may be a better choice.  

We also recommend choosing a “successor” trustee or executor if life’s unexpected twists and turns make it impossible for the first choice to do the job. Read Naming a Trustee is a Big Decision to learn more about what families should consider when designating the estate’s trustee. 

Discuss long-term care options/wishes with parents with dementia

Eventually, people with dementia require 24/7 care, which is not a job for spouses and family members. It is exhausting and can completely deplete loved ones of their resources on every front. This is the time to discuss long-term care options and wishes, so it’s easy to make necessary transitions when the time is right.  

Visit’s page about Care Options for detailed descriptions of the options, which include: 

  • Adult daycare 
  • In-home care 
  • Progressive assisted living 
  • Memory care centers 
  • Hospice care (for end-of-life) 

It’s critical that you also plan for the cost of long-term care. People can live for years with dementia, so the costs add up. Usually, long-term dementia care is funded by any combination of the following: 

  • Social security benefits 
  • Medicare/Medicaid 
  • Retirement pensions/savings 
  • Investments 
  • Veteran’s benefits 
  • Long-term care insurance 
  • Reverse home mortgages 
  • Financial contributions from family members 

Your estate plan needs to encompass the funds necessary to pay for care now, into a projected future, and then to distribute assets down the road. 

Meet with an Estate Attorney and Financial Planner

Meeting with an estate attorney and financial planner is well worth the time. Licensed attorneys and financial planners are happy to meet with you for one-time consultations to support your planning process and guide estate planning personalized to your parents’ situation. 

To make those meetings as efficient as possible, make sure to bring: 

  • Itemized list of assets (e.g., bank accounts, investment/retirement information, contents of safe-deposit boxes, vehicles, real estate). If possible, include their current value 
  • List the individuals listed as current owners, account holders, and beneficiaries 
  • Copies of any former or current wills/trusts as well as other legal documents 
  • Copies of real estate deeds 
  • Long-term insurance documents or brochures in the files 
  • Life insurance policies/values 
  • Income tax records for the prior three years 
  • Health insurance policy information 
  • List of contacts for current/potential decision-makers, including family members, caregivers, domestic or long-term partners, accountants, tax professionals, legal professionals, financial advisor(s), etc. 

You might also find it helpful to read The Ultimate Estate Planning Checklist and become familiar with common estate planning terms using our Estate Planning Glossary. 

A well-planned estate brings peace of mind to anyone, but it’s an invaluable source of comfort for parents with dementia and their families. Tseng Law Firm is here to help if you would like assistance reviewing, amending, or creating an estate plan for your aging parents. Contact us to schedule a consultation. (510) 835-3090.