Estate Planning for Clients with Alzheimer’s

Estate Planning for Clients with Alzheimer’s

By: Martin M. Shenkman, CPA, MBA, JD

Introduction to Series on Planning for Chronic Illness

This is the second in a series of articles addressing planning for a range of different chronic illnesses. The first article which appeared in the April-May 2008 issue addressed Parkinson’s. The objective is to provide practical advice on how practitioners can plan for a deal with clients with each of many different chronic illnesses. While there are similarities between each of the illnesses that are noted in all articles, each chronic illness has its own nuances that differ significantly.

Dementia Impacts Many Clients

Dementia is deterioration in cognitive function, often as part of a progressive illness, that reaches a level or degree that impacts the client’s daily life. It is usually defined in terms of a decline in memory accompanied by other cognitive impairments. There are a number of causes of dementia, but Alzheimer’s disease (“AD”) accounts for approximately 70% of dementias in Americans age 71+. Vascular dementia, which is caused by a decrease in blood flow to the brain typically as a result of a stroke, accounts for about 17% of all dementias. Other causes, such as mixed dementia, dementia with Lewy bodies, and Parkinson’s disease, account for the remaining 13% of dementias. Cognitive decline has a host of implications to the estate planning process generally:

  • Creating a sense of urgency to complete planning while feasible.
  • Determining and corroborating whether a client is competent to complete a particular plan, or to sign a particular document.
  • Planning for disability, potentially one that lasts over many years.

Alzheimer ’s Disease Affects Many Clients

AD affects every aspect of a client’s life and leads to dementia and eventually death. AD is surprisingly common so its planning implications need to be taken seriously. More than five million people in the US have AD. Since nearly 3/4ths of AD clients are cared for by their family, AD also has a dramatic impact on the AD client’s caregivers and immediate family. This article will provide background on Alzheimer’s and explore some of the ways both planning and document drafting can be modified.

Background on Alzheimer’s Disease

AD results in dementia, and is fatal. AD is the fifth leading cause of death for those age 65+. There are two characteristics of AD that account for the changes in the AD patient’s brain: tangles and plaques. A protein called “tau” accumulates in abnormal deposits in neuron pathways in the brain called “microtubules”. Normally, nutrients are transported to brain cells, and waste away from the brain, through microtubules. Eventually, microtubules collapse into what is referred to as “tangles”. Plaques are microscopic accumulations of beta-amyloid fragments. As the tangles and plaques expand, the AD client’s memory and other functions decline. Nerve cells loose their ability to communicate and AD progresses. As this spreads, brain tissues dies, and impairment accelerates.

  • The average age for the onset of AD symptoms is about 73 years and nearly three years typically passes before AD is diagnosed. Thus, important years during which planning and implementation can occur may be lost.
  • The incidence and risk of AD (and other dementias) increase with age. As clients age, their risks worsen. Encouraging clients to have annual review meetings, especially as they advance in age, is vital to their protection.
  • Unlike some chronic illnesses, AD is not erratic. AD means a steady decline. While the rate of decline varies between those with AD, continued loss of memory and function is certain. Thus, in contrast to multiple sclerosis (“MS”), where a client might have an attack (exacerbation) that remits, the AD client’s symptoms progress downward. The warning an MS client might receive through an attack won’t happen. Practitioners, and the AD client’s family, should push to get planning done as quickly as feasible after a diagnosis of AD.
  • There is no turning back. AD is irreversible. If memory loss is attributable to other physical conditions, such as vascular dementia (the second most common form of dementia following AD), or a stroke, medication and care may reverse the impact, or prevent further deterioration. This is not true with AD. Current drug therapies may slow the worsening of symptoms for 6-12 months, but provide no cure. Planning must be addressed while it still can be.
  • It is estimated that nearly 50% of those over age 85 have AD! This statistic alone demands that all clients, as they approach their eighth decade, should have planning in place well before they could become a statistic. Planning for those in their 80’s and older should be refining existing planning in light of AD and other developments, not creating planning that did not theretofore exist. The risk is simply too great.
  • Those with AD generally survive about four to eight years after diagnosis, although some have survived as long as 20 years. For those diagnosed at age 65, life expectancy is somewhere over eight years. For those diagnosed at age 90, life expectancy is less than 3.5 years. Generally, clients diagnosed with AD have about half the life expectancy of clients without AD. Thus, the harsh reality for the AD client is that the number of years during which the client will be competent are limited, and death may in fact be imminent and should be planned for.
  • The duration of AD requires the planning of address care, living accommodations, and the financing of these needs for a potentially long period. The average length of stay in a nursing home is about 2.5 years. For those AD clients staying at home the average cost is about $150,000. The average net worth of Americans in 2006 was about $144,000. The cost of AD would be devastating. For wealthier clients, these average costs, if really reflective of the costs to be incurred, would be less of a concern, especially if long term care insurance had been purchased to cover some portion of them.
  • Assumptions are always dangerous and the specifics of each client’s personal situation must be addressed. Approximately a half million people age 55-64 suffer from dementia, and of these about 200,000 have what is referred to as younger-onset AD.

Non-Cognitive Impact of AD on Clients

The affects of AD on a client extend well beyond the more commonly known cognitive impacts discussed below. Most AD clients have other serious health problems as well. Practitioners should endeavor to identify those other conditions and determine the impact on planning. For example, approximately 60% of clients with dementia have hypertension. Almost a third have coronary heart disease.

  • Apathy affects more than 70% of AD clients. As it is clear from the discussions throughout this article, it is vital for the AD client and his or her family and loved ones to complete planning before the disease progresses to the point of making it impossible to implement planning. Yet, the AD client’s apathy may make the client act the opposite of what all logic and caution would indicate. If the client is not pursuing the appropriate planning with sufficient earnest, practitioners may wish to reach out to family to secure their help in overcoming the inertia. However, for attorneys, reaching out to family members if not authorized to do so by the AD client may constitute a violation of attorney ethics, so caution must be in order. Attorney’s serving AD clients may consider including an authorization to communicate in the retainer agreement with the AD client.
  • Sample Provision:I expressly authorize ATTORNEY NAME to communicate with the agent named under my durable power of attorney, health care proxy, as well as my wealth manager ADVISOR NAME, and my Certified Public Accountant CPA NAME. Collectively my agent and accountant named herein are referred to as “Recipients”. I understand that ATTORNEY NAME will have to exercise judgment as to what communication is appropriate in the circumstances. Therefore, I authorize ATTORNEY NAME in their sole discretion to communicate, or not communicate, with any person named as a Recipient, or any successor or alternate to them designated in the same document appointing a Recipient. I understand and agree that this authorization may constitute an express waiver of the attorney-client privilege which I have with ATTORNEY NAME. I, on behalf of myself and my estate, successors and assigns, hold ATTORNEY NAME harmless from the exercise or non-exercise of this power.”
  • AD clients commonly suffer from language problems (aphasia). As the AD client struggles to identify the correct term or phrase to use in conversation, the client’s ability to understand your comments, and reading comprehension, all deteriorate. This decline will set a time frame, and perhaps urgency, to completing more sophisticated planning quickly.
  • Personality changes are a common symptom of AD. AD clients might become delusional and/or suspicious. These changes may have the AD client stop trusting family members named as fiduciaries. A power of attorney, revocable trust or other document could be revoked when in fact it should have been retained as a protection against the vary issues leading the AD client to inappropriately revoke it.
  • Isolation can occur as the AD client becomes embarrassed over his or her inability to communicate, maintain personal hygiene, etc.
  • Aggressiveness, anxiety, and other symptoms can also occur.
  • AD clients may experience physical symptoms such as tremors, slowness, or difficulty in movement, or rigidity. However, physical activities, such as the basics of self-care (as distinguished from daily living, such as finances, etc.) occur, if at all, later in the course of AD. This contrasts with other chronic illnesses which can be severely physically disabling.

Cognitive Impact of AD on Estate Planning

The cognitive impact of AD is substantial. In contrast a client with Parkinson’s disease may generally be able to function normally, but have some issues with disorganization, distractibility, prioritizing and forgetfulness.A client with Multiple Sclerosis (MS), does not face the same cognitive impairment a AD client does. Only about 30% to 50% of those with MS experience cognitive impact. Of those with cognitive impairment, 34% only have mild, and 22% moderate, impairment. MS cognitive impairment may affect certain activities (e.g. the ability to balance a complex bank and brokerage statement), but not others, such as the ability to make many of the macro decisions often addressed in planning for disabled clients (choosing to downsize to a smaller house). Practitioners should therefore be cautious to understand the greater significance of AD cognitive impact as compared to clients with other chronic illnesses.

AD symptoms are often clinically divided into stages (mild, moderate, severe and profound), which usually correspond with the person’s point in the disease (early, mid-, or late stage). These can be misleading to practitioners unfamiliar with AD, because even at the early stage of AD, an AD client may become disoriented as to time, date or place. Care must be taken when an AD client is executing documents to demonstrate that at the time of execution there was sufficient understanding of the document and the import of what was being done to withstand a challenge for competency or undue influence.

At the early stage of AD a client can have difficulty with math and may find it difficult to balance a checkbook. The loss of executive function (organizational and complex decision making skills) can occur in the early phase of AD.Can a client who struggles to balance a checkbook have sufficient competency to understand sophisticated estate planning mechanisms like charitable lead trusts (“CLTs”), grantor retained annuity trusts )(GRATs) and so on? If not, will the efficacy of such techniques be undermined by a competency challenge?

With AD clients, practitioners particularly need to understand that there is no single definition for competency. The law recognizes various definitions of the term depending on the context. Context depends on the general action being taken (e.g., the document being signed) and, in addition, on the nature of that act or document to the particular client’s circumstances.

  • The degree of competency to sign a will (testamentary capacity) is less than that required to execute a contract (e.g., a family limited partnership agreement).The degree of competency to sign a durable power of attorney will vary depending on state law. Some states may permit testamentary capacity as the benchmark, other states may apply a higher contractual standard. Assessing competency is a function of what degree of capacity a specific legal action requires.
  • The circumstances of the specific AD client matter impact how competency should be evaluated in the particular situation. Thus, a client at the mild stage, and perhaps even a moderate stage, of AD may have competency to sign a will bequeathing assets equally to her children, but may not have the competency such that the estate planner would be comfortable with the AD client disinheriting a child who had been left an equal share in a previous will. Estate planners should consider the degree of physical, financial or other harm to the AD client from the particular action. Practitioner’s should evaluate the client’s ability to articulate the reasoning leading to a particular decision, and the client’s ability to understand the consequences of the decision involved. For example, if a client intends to transfer all of his assets to a child as part of a plan to preserve assets, substantial financial harm can come to the client if those assets are misused. Practitioners should consider the historic context of the client’s gift giving, the relationship with the child, the child’s financial and personal status, and other factors. If an AD client is giving assets to one child rather than to all children, the increased risk of a claim by the non-donee children should be weighed. Consideration should be given as to whether the decision is consistent with the client’s long-term goals and values.

A common recommendation to those evaluating whether they have AD is to maintain a journal of symptoms to assist their physician in making the diagnosis. This journal could be an important confirmation of the AD client’s competency at various points in time relevant to the estate planning process. While many practitioners may direct an AD client to medical experts for an evaluation, it should be remembered that ultimately competency is a legal, not a medical, determination. A helpful guide for practitioners is a book jointly published by the American Bar Association and the American Psychological Association, Assessment of Older Adults with Diminished Capacity: A Handbook for Lawyers (2005).

Interview Questions for a Client with AD

With the above background, practitioners can formulate questions for an AD client intake or interview to understand the impact the disease will have on the specific plan:

  • What are the current symptoms of your AD, in particular cognitive ones?
  • What stage of AD are you at?
  • What is your age?
  • What other health issues do you have, especially those that may exacerbate memory or other cognitive issues?
  • What medications are you taking and how do they impact cognition?
  • Who is or will be your care-giver? Which family members are unlikely to provide care-giving help?
  • Do you plan on making different gifts or bequests to reflect the degree of care taking assistance?
  • Are you planning on paying your care-giver?
  • Do you have long term care insurance?

Naming Fiduciaries and Care-Giver When Planning for a Client with AD

Since AD is a steadily deteriorating chronic illness, similar to Parkinson’s, or Primary Progressive Multiple Sclerosis, an agent under a durable power, or a successor trustee under a living trust should understand the virtual certainty of the need to serve, and the likely duration of that role.

Careful consideration should be given to dividing financial and legal management from care-giving services, or to at least institute some checks and balances. For example, if the client’s eldest child will be providing care-giving, if that child is the sole agent under a durable power of attorney, it increases the opportunities for that child to abuse the elderly demented parent. Even if the child is completely ethical in her handling of her parents’ affairs, the possibility of abuse may incite non-care-giving children to challenge financial and other actions. If the parent is adamant that the care-giving child handle finances as well, perhaps that child can be encouraged to have an independent accountant maintain records and issue reports so the entire family is aware of all matters to hopefully avoid any later claims.

Given the duration of AD and the magnitude of care-giving services, the client, while he or she is able to, should carefully consider including a compensation provision a durable power of attorney. Compensation should not be provided in a health care proxy. However, the care-giver could be provided compensation by authorizing, or even mandating, that the agent under the power of attorney provide for it.

For health care related agents, the difficulty of making the end of life decisions that the AD client wishes must be understood. These decisions should be discussed in advance to assure that the agent has the emotional, religious and personal ability to take the steps desired by the AD client.

The emotional stress of serving as a care-giver and/or agent for an AD person is considerable. When planning these appointments with clients compensation is only part of the planning. Consideration should be given to successor care-givers and agents, mandated time off, and other techniques. For example, a revocable living trust or power of attorney could mandate that the fiduciary call in an independent social worker quarterly (or at some other appropriate interval) to make recommendations for care.

Estate Planning Documents

Estate planning documents for an AD client should reflect the likely permanence of the documents. With a definite trajectory of cognitive decline, unlike other clients who may revisit and revise non-irrevocable documents, the AD client might not have that luxury. Planning for what will likely be years of disability when others will have to handle financial, legal and other matters is a certainty that should similarly be reflected in the documents. Some of the modifications to accomplish these goals are noted below. For estate planning practitioners, none of these will be unexpected or complex. The biggest challenge of drafting will likely be addressing the AD client approaching the fringe of competency, and helping the client through the emotional difficulties of making tough decisions which most clients consider theoretical, but for which the AD client knows are a likely certainty in the near future.

Power of Attorney

Durable powers of attorney for an AD client should address the known disease course of AD. The AD client will lose competency and be dependent on an agent to handle matters for years. The impact of this on agent selection is important. The agent should have the ability to address the tasks that will arise with certainty. Compensation should be considered. A sufficient series of successor agents, or reliance on a funded revocable trust, should assure continuity of coverage even if a particular agent ceases serving since the AD client will continue to need help.

The decision whether or not to use a springing power of attorney could be different than that for some other chronic illnesses. The power may only have to be triggered once, when the level of incapacity reaches a point where an agent has to permanently take over. Thus, a springing power is feasible to use.

Given the long term nature of the assistance a PD client will need, a funded revocable trust should probably be used in lieu of primarily relying on the durable power. In such cases the power should be coordinated with the trust, especially if different people are named (e.g. a bank or trust company under the revocable trust and a family member under the power).

Living Wills and Health Care Proxies

Living wills and health care proxies for an AD client will generally be similar for most clients, but do warrant a few considerations.Since AD can only be confirmed 100% through a brain autopsy, many suffering with AD will wish to include a specific consent in their living will or health proxy directing that a brain autopsy be permitted and their brain be donated to promote scientific research into AD. Religious issues should be addressed if pertinent in this regard.

Given the progressive nature of AD and the certainty of cognitive issues, a guardianship designation should be included in the health care proxy (or a separate guardian designation prepared). Some state laws expressly permit this. But, at minimum such a designation provides clear evidence of who the AD client would want to serve in such capacity if a later court proceeding were necessary to confirm a guardian.

Sample Provision: “To the extent that I am permitted by law to do so, I hereby nominate my Agent, FINANCIAL AGENT NAME, to serve as the guardian of my property, and my Health Proxy, HEALTH AGENT NAME, to serve as the guardian of my person, or in any similar representative capacity, and if I am not permitted by law to so nominate, then I request that any court that may be involved in the appointment of a guardian, special medical guardian, conservator or similar representative for me give the greatest weight to this request.”

Given the certainty of cognitive impairment, the issues of end of life decision making take on considerable importance for the AD client. Language in a typical living will might warrant modification and tailoring to reflect the realities of AD. It should be born in mind that most AD clients will eventually succumb to other illnesses, and not AD. These may range from a stroke, to pneumonia, etc.

Sample Provision: “If I have an incurable or irreversible, severe mental or severe physical condition; or am in a state of permanent unconsciousness or profound dementia; or am severely injured, orhave a terminal illness. For purposes of the above, “terminal illness” shall be defined as an irreversible, incurable and untreatable condition caused by disease, illness or injury when an attending physician can certify in writing that, to a reasonable degree of medical certainty, there is no hope of my recovery or death is likely to occur in a brief period of time if life-sustaining treatment is not provided. In these situations I wish that no heroic measures be taken to preserve or prolong my life.”

This type of provision should be revised to reflect the reality of AD.

Sample Provision: “I have Alzheimer’s disease which is incurable and irreversible and which will result in dementia. Therefore, when if I reach a stage of profound Alzheimer’s disease when I have a nearly complete, or a complete lack of awareness of my surroundings I wish that no heroic measures be taken to preserve my life…. If I reach a stage of severe Alzheimer’s marked by disorientation psychosis, delusions, paranoia, and/or hallucinations,and also am severely injured, orhave a terminal illness (For purposes of the above, “terminal illness” shall be defined as an irreversible, incurable and untreatable condition caused by disease, illness or injury when an attending physician can certify in writing that, to a reasonable degree of medical certainty, there is no hope of my recovery or death is likely to occur in a brief period of time if life-sustaining treatment is not provided) then I wish that no heroic measures be taken to preserve my life…”

Many religious faiths take issue with terminating life support based on a lack of quality of life. The view taken by some is that life in any form is sacred and must be preserved. Given the prognosis of AD, this issue, if relevant to the AD client, or even if not but if relevant to family or those designated as agents, should be addressed directly and explicitly in the documents. This issue is particularly pronounced with respect to the provision of nutrition and hydration. Should nutrition and hydration be provided to an AD client with advanced dementia that is unaware of his or her surroundings?

Another issue to address in a living will and health proxy is companion care, hospice care, and other end of life decisions. The AD client may have specific preferences as to the use of in-home care, assisted living, an Alzheimer’s care center, or a nursing home. These preferences can be specified in the positive, or the negative, as the case may be. Also, review the allocation of these decisions as between the financial agent under the power of attorney and the health care proxy.

Revocable Living Trust

Revocable trustsare an obvious technique to assist any client with a chronic illness to manage assets. However, since dementia is certain for the AD client, the use of a funded revocable trust is appropriate in even more situations then for those suffering with other chronic illnesses. The typical revocable trust isdrafted with the grantor as sole trustee. For a client with AD it may not be possible for the AD client to serve even as a co-trustee, even in early or mid stages of AD.If the AD client does not have a trustworthy line of friends or family to monitor care, discuss the possibility of incorporating into the trust the use of an institutional trustee and a mandate for periodic evaluations of the AD client by a social worker or other professional who is independent of the institution providing care.

Estate Tax Planning

As noted earlier the typical diagnosis of AD is at around age 73. At this age many clients with AD will have substantial savings, long term disability and long term care insurance, and sufficient resources that will be factors to consider in estate tax planning.Many AD clients with the financial wherewithal will be interested in providing charitable support to the Alzheimer’s Association, or other charities involved in research or serving those with Alzheimer’s. Charitable giving should be planned for in a manner that best fits the AD client’s disease course and family responsibilities.

Family Members’ Estate Plans

The AD client’s family members should use special needs trusts (“SNTs”) as receptacles for any assets left to the AD client to protect those assets from being dissipated to pay for medical costs that state programs would otherwise cover. If the AD client’s estate is sufficient to sustain all of his or her needs a better approach may be for family members to avoid bequests to the AD client.

If family members had named the AD client as a fiduciary, their documents should be revised or the AD client should execute a resignation while competent to do so.

Will Challenges and Other Contests

Any client that has dementia is more likely to face a challenge, or their estate a will contest, than a client who does not suffer from AD or another form of dementia. Practitioners should be alert to these issues and address them proactively. The following example presents two scenarios, each told from a different child’s perspective, highlight the difficulties common in many AD client situations.

Example – Daughter’s Perspective:Sandy Smith is age 76, lives in Connecticut, and has been diagnosed with AD. Sandy has two children Joan, the oldest, and Tom the youngest. Joan lives nearby and has helped her mother for years with household chores and bill paying. Tom lives in Nevada and is quite busy with his young family and career. There has always been jealousy between Joan and Tom. As Sandy’s situation has worsened, her daughter Joan gave up a promotion and substantial raise with her company because she felt it imperative to stay in Connecticut to help her mother, and the relocation to Florida that the promotion would have required would have made care-taking impossible. Sandy realized the sacrifices that Joan was making and, over time, asked Joan to re-title several large accounts to joint name with Joan. Because of fall and hip replacement surgery it was hard for Sandy to get around. She had Joan change these accounts using the power of attorney the attorney prepared naming Joan as agent. As Sandy’s AD progressed she really didn’t have the competence to make decisions. Joan continued to care for her at the expense of her own career and social life. Since Sandy had made it clear to Joan that she wanted her to inherit the joint accounts Joan used other accounts to pay for Sandy’s expenses. By the time that Sandy died, other than her home, the only assets left were the joint accounts with Joan. This was exactly what Sandy had wanted done.

Example – Son’s Perspective:As Sandy’s situation has worsened, her daughter Joan, who never really pursued a career with any vigor, forced herself on her mother, and began to control her and her finances. Sandy realized the sacrifices that Tom had made to build is family and career, and had always promised him help for his children’s college costs. To prevent this from happening, after their mother already had lost substantial decision making capacity, his sister Joan moved in for the kill. Joan, unbeknownst to her mother or brother surreptitiously used a power of attorney to re-title several large accounts to joint name with Joan so she would inherit them on her mother’s death. As Sandy’s AD progressed, she did not really have the competence to make decisions, so Joan used Sandy’s remaining accounts to pay for part-time care taking with the intent of depleting any resources Tom could inherit. Although Sandy had made it clear to Tom that she wanted him to inherit extra funds to pay for his children’s college, Joan used these accounts to pay for Sandy’s expenses. By the time that Sandy died, other than her home, the only assets left were the joint accounts with Joan. This was exactly the opposite of what Sandy had wanted done.

Planning to document gifts, restricting gifts under powers of attorney, mandating equal gifts, coordinating title to assets, and other actions of agents under powers and dispositive provisions under wills and trusts take on greater importance with an AD client. The use of annual (or even more frequent) meetings to monitor these matters, and document the AD client’s intent while they are able, can be vital to securing their wishes. Steps which practitioners might consider include:

  • Revise and resign the will. If a client is in the early stages of AD and competent, have them return to re-sign a new will adding a few modifications (e.g., $5,000 to the Alzheimer's Disease and Related Disorders Association, Inc. (the Alzheimer's Association). Making a change demonstrates that the client revisited the will. Resigning with new witnesses and a different notary creates a pattern to demonstrate the client’s intent in the event of a will challenge. Further, if the most recent will is held invalid as a result of a challenge, the will signed 3 months earlier with nearly identical dispositive provisions will be reinstated.
  • Be certain that the care-giver and anyone else receiving a bequest is not present when documents are signed and document this fact.
  • If the dispositive provision favors a particular heir, especially if that heir is the caretaker, have the client explain the reasoning for the disparate bequests, have the caretaker/heir document their hours/efforts with an ongoing diary, and have an independent accountant estimate the economic cost to the caretaker of providing services.
  • List all family members in the will and expressly provide for anyone not being left a bequest to avoid a challenge on the basis of the scrivener having left out a particular heir.
  • Take independent steps to corroborate the client’s capacity at the time any document is signed.

AD Client Incapable of Signing Documents

If the AD client’s disease has progressed too far for the AD client to sign documents planning takes on a different perspective. The steps to take, while obvious to practitioners are summarized below:

  • Carefully confirm the mental status of the AD client. It may still be feasible to sign a will even though the AD client does not have sufficient contractual capacity to sign a trust or other contractual document.
  • Determine from consultation with the AD client’s caregiver and medical providers if the AD client has periods when cognition may be greater. For example, for a client in the mid-stage of AD, confusion is common, and it often worsens at night. It may be worthwhile to evaluate competency early in the day when confusion is less pronounced.
  • Obtain HIPAA authorization to communicate if feasible, or if not inquire as to the course of the disease.
  • Inventory all assets and liabilities.
  • Coordinate estate needs with the client’s financial planner, including addressing the financial contribution of various insurance policies.
  • Obtain, read, and analyze all existing estate planning documents and determine what flexibility and options they include that may be utilized in the current situation to better help the client. If there is no valid will evaluate the impact of the state’s intestacy laws on the AD client’s situation. It may be feasible to have an agent modify beneficiary designations and title to assets to affect the desired transfers.
  • Carefully evaluate ethics rules governing your conduct. If the AC client is not competent to retain you, who is your client? What areyou permitted to do?
  • Evaluate the merits of seeking a court appointed guardianship. For example, the AD client may have a substantial taxable estate and the only flexibility under existing estate planning documents executed prior to the AD diagnosis are limited to making annual gifts up to the annual gift exclusion amount. That limit will hardly make a dent in the taxable estate. Consider whether the powers permit establishing and contributing to a family limited partnership or other entity that may discount values (and the risks of that type of planning). Evaluate the potential for a court conferring on a guardian the right to make more extensive estate planning steps.


AD, as any other chronic illness, affectsevery document and aspect of planning. Generalizations are inappropriate and will not serve the interests of the client with a chronic illness, or his or her family. Every chronic illness has its own nuances, and hence impact on planning. The certainty of cognitive impairment that accompanies AD must be carefully addressed in all aspects of planning and drafting.

Our Consumer Webcasts and Blogs

Subscribe to our email list to receive information on consumer webcasts and blogs, for practical legal information in simple English, delivered to your inbox. For more professional driven information, please visit Shenkman Law to subscribe.

Ad Space