All too many of our clients come to us with stories of the difficulties they faced when mom or dad are diagnosed with dementia. Without advanced planning, there was no one to legally manage their finances, make medical decisions, or deal with real property. Dementia is a terrible disease that leaves the shell of the person we knew and loved and creates its own set of challenges. Who pays for the nursing home? Who decides which nursing home is best? Who determines what care is needed? How do people access the funds that are sitting frozen in accounts? What about the house?
Unlike a hospice situation where the person is often incapacitated but for a shorter period, dementia can last for years. In-home care is the most expensive option averaging at $50,000 a year, while adult day-care averages at $18,000 a year, and assisted living ranges from semi-private rooms (around $45,000) to private rooms (around $85,000). With the general population aging and the demand for such facilities, the costs are only increasing.
Many families we talk to have taken out a second mortgage on their home to pay for the cost of care for a parent with dementia, or taken a step back from their career to stay home and provide care themselves. Either way, the financial burden is steep and unless a parent has long-term care insurance, there aren’t many options. It is possible to access a parent’s bank accounts and other financial assets under three conditions: (1) mom or dad created a legal power of attorney before they had dementia, (2) a child petitions a court for legal guardianship and conservatorship, or (3) mom or dad added a child to their account(s).
Guardianships and conservatorships are expensive, time-consuming, and can be very frustrating. They also require annual reports and inventories to the court. See our blog on guardianships. Adding a child to a bank account can open mom and dad’s assets up to the child’s divorce or creditors. While it may seem expensive at the time, an advanced health care directive and financial power of attorney are the cheapest alternatives, in the long run, to care for a parent with dementia.
Another way to avoid guardianships and conservatorships is to create a revocable trust that gives the creator total control over all the trust assets during their lifetime but allows a successor Trustee to automatically step in and take over if the creator(s) become incapacitated. A trust, unlike a power of attorney, can also deal with the sale and management of real property and provides for the distribution of assets after death. A revocable trust is not a way to apply for Medicaid or shelter funds from creditors, but it does make it easier for someone to step forward and provide care and manage finances.
While there is no one right answer for everyone, there are various good options for each person’s situation. Let us work with you to find which plan best fits your needs, for current and future circumstances.
Disclaimer
This Blog/Web Site is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide legal advice. By using this blog site you understand that there is no attorney-client relationship between you and Grissom Law, LLC.