Cutting The Legal Path Through Alzheimer's Disease

• As soon as the diagnosis is made, action must start immediately.
• Create the legal structure that will ensure success.
• The only way to reliably protect and effect the patient's values and goals is with a well considered plan operating in a protective legal structure.

Alzheimer’s Disease

Alzheimer’s Disease: a chronic, degenerative dementia that takes away a person’s ability to live independently. It produces total dependence on others to the point of dressing, eating and personal hygiene, often resulting in a long term stay in a nursing home. By that time the patient may be a ward of the probate court with his property under court supervision with court appointed guardian making personal decisions. With recent changes to the Medicaid law, clients and families must have financial plans in place more than five years before entry into a nursing. In other words, as soon as the diagnosis is made, action must start immediately.

With an effective response plan the loss of control over one’s affairs can be avoided. Patients can name the trusted persons who will take care of their affairs and be assured of receiving the best quality care, respect and independence.

In our experience working with Alzheimer’s disease and other degenerative conditions we have found the best path is to have a “care plan.” It follows the projected course of the disease and addresses questions such as “Who will personally assist the patient with dressing? Or hygiene? Who will manage the financial affairs and contracts? How will the increasing needs of the person be met?”

The plan will identify the resources available both human and financial. It will set the standard of care for those who will be assisting. In addition the plan will consider the needs of the spouse, children and the patient’s desire to leave an inheritance or not. The plan coordinates the response of the client’s family and professionals. The elder law attorney’s role is to create the legal structure by specialized legal documents needed to make the plan a success.

The overall process may be summarized in five points.

First: Understand the course of the disease.

What effect will it have and when may we expect those to occur? Our “Alzheimer’s Answer Book” has a full description of the course of this devastating disease by Dr. Bruce Sack and Diane Hischke, RN, MSN. Call for our publication - free to Michigan residents.

Second: Inventory the human resources of the patient.

Caring for the Alzheimer’s patient requires a range of assistance from handling financial affairs to attending to personal needs. There a variety of options that involve a mix of in-home and off premises commercial services.

Services may be provided in the patient’s home. The spouse is most often the provider and a successor to the spouse must be identified. Where the patient is a survivor or divorced, a local child may provide daily monitoring and assistance or move in with the parent to be the round-the-clock aide. Support services may include in-home assistance by a home health agency or out of home at an Alzheimer’s oriented adult day program.

The patient may move out of the home. This is a common result when a spouse dies before the patient needs nursing home care. The move may be to a commercial residential facility – “assisted living” – that provides needed services. Often however the move is to the home of a child for the 24 hour care.

An inventory of the available human resources will identify those services that may be provided by family and which by commercial providers. The inventory will answer the questions: “Who will make up the team of caregivers for the patient? Who will be available and when – 24 hours a day or after work? Who will manage financial affairs? Where will assistance be provided? In the patient’s home or elsewhere? Will family members need compensation? For example what if a daughter takes a leave from work to be the 24 hour caregiver - will she be compensated? To what extent will commercial providers be needed for daily care needs? How much will we rely on services such as adult day care, in-home agency assistance, residential assisted living, and finally nursing home?

If the well spouse dies first we must consider who should then manage the property for the patient? Will the patient be able to live at home alone? Will the patient need to move to a child’s house, an assisted living residence or a nursing home? Who will make these decisions? What direction will this person follow? Will the property go to: to the children with the expectation they will take care of the survivor; to the survivor; or, to a trust for the survivor? If the last option is pursued, who will be the trustee?

Third: Inventory the financial resources.

With the inventory of human resources completed we will know what services we will need to purchase. We will have an idea of the cost of care. How much will we spend and where will the money come from? What funds will be available? When? Are there investments that may be of limited availability such as CDs, IRAs, bonds or annuities? Is the equity in the home available to generate cash flow? Should a reverse mortgage be part of the plan? How should the funds be allocated to care of the patient and to the needs of the “healthy” spouse? Is there a disabled or dependant child? Is the home to be part of the legacy the patient wishes to leave to children? Will gifts be made to protect assets? What insurance do we have and exactly what will it pay for? Do we have long term care insurance for the patient or spouse? Is there sufficient income for the “healthy” spouse to pay for long term care insurance? If so we may allocate more of the investments to take care of the Alzheimer’s patient.

Fourth: create the plan.

With the above inventories in place we have an outline of the care plan. We have identified who we will rely upon for our care team. The plan should map out the care program in all contemplated scenarios. What if the well spouse becomes ill too? What if a son or daughter who would be assisting has to move out of town? We have made contingency plans and have identified the funds that will be available for care of the patient and spouse.

Fifth: Create the Legal Structure that Will Ensure Success

The patient’s support team must have the legal authority to access all assets and use them according to the “plan.” Broad powers of attorney are a minimum. The general power of attorney must be durable and grant extraordinary powers. The healthcare power of attorney must address the treatment issues that arise during the course of the disease. However the team needs more than authority, it needs direction.

The trust is the center of the planning structure and all assets are controlled by it. All property is transferred to it including insurance polices. Through the trust we can binding instructions that will assure success. The manager of the money and property, the “trustee,” must accept the terms and conditions stipulated in the trust. The trustees must follow the plan. The trust must be planned and funded to implement the phases of plan. The trust is usually in the name of the healthy spouse who is typically the first trustee. The well spouse must be provided with back up assistance for the patient’s care needs and provide for the potential needs of the spouse. If the well spouse is becomes ill then the successor trustee steps up according to plan. Administration continues without change in direction.

Other legal documents round out the elements of our structure. Caregiver contracts may be part of the plan. <see page> Lease or rental agreements may be part of the plan. If any assets are gifted or property transferred to children for management, family partnership agreements may be used to state the terms of administration of those items. The plans and instructions must be in writing and made legally enforceable.

Sixth: Get Timely Updated Advice

It is evident that the assistance of an elder law attorney is simply necessary in putting the plan together. This must be done as early as possible while the patient can still participate in decisions. The assurance of success comes through continued coordination with the elder law attorney and other professionals. Life refuses to go according to plan. A spouse may develop a serious illness and need assistance too. A caregiver daughter may have to move away to follow a career path. A child may be laid off or retire early and become available to be a full time caregiver. Laws change as well and that may require changes in our structure to take advantage.

The above “scratches the surface” of questions that need to be answered. We will look in more depth at the situations of two common players in the Alzheimer’s drama: the spouse and the caregiver.

What of the “well” spouse?

While the focus on the patient is necessary, we cannot overlook the others who will be profoundly affected by the disease. The patient’s spouse is most often the person on whom all weight falls. In our inventories the spouse is the center of it all. He or she handles all finances, makes all decisions, handles all care needs. Do we tend to ignore the “well” spouse?

The personal needs of the spouse are too often overlooked. We cannot presume that the “healthy” spouse will remain healthy. Statistics show that the stress of care giving often results in premature health failure. Financial resources must be allocated for the spouse’s needs. We would not propose to allocate all of a couples’ net worth to the care of the patient. There must be contingency planning for the spouse. For example long term care insurance may be relied upon to make up for funds allocated to the Alzheimer’s patient. The insurance would use the leveraging effect of monthly income to create additional assets for the spouse. What if the health of the spouse or the available income rules out insurance? Another potential source of funds is the equity of the home accessed by a reverse mortgage. This option can be used when needed regardless of health.

What of Caregivers?

Where there is no spouse to handle the full-time job of caregiver, children often step up to fill the need. The caregiver does more than attend to the personal needs of the patient. Often the caregiver must take care of all business of the patient. It is the caregiver who talks to doctors, handles insurance claims, pays all bills of the patient and anything else that needs to be done. The caregiver needs legal authority to do what needs to be done and protection from claims of others. For example, what if the caregiver hires an agency to provide assistance and then fires the agency for poor performance? Will the caregiver be sued under a breach of contract claim?

“Caregivers have needs too.” The needs of the caregiver are often overlooked – even by the caregiver. Care giving is not only an heroic act of selflessness, it is very valuable. 24 hour around the clock care can cost fifteen dollars an hour and that is over $131,000 per year! There is no reason why the caregiver should not be financially stable and have adequate health insurance. For example, if a daughter takes care of her father and she does not have good health insurance, her father should cover her insurance premium.

What Does the Elder Law Attorney Do?

We create the legal structure that will shelter the patient and dependants. Specialized documents must be drafted for each component of the plan. The patient appoints the helpers, gives them instructions and then gives them the legal authority they need to bring in success.

Conclusion

Alzheimer’s Disease follows a predictable course. The time it takes to traverse the course may not be known but the destination is. With informed planning the patient and family may expect the best possible outcome. The only way to reliably protect and effect the patient’s values and goals is with a well considered plan operating in a protective legal structure. In that way the patient and family can look to cherish the good days that there will be.