No one likes to think about how difficult life could be if they were sick and unable to manage their affairs.
With dementia on the rise, it is important to think about who you trust and what the unintended consequences of such a decision can be on both financial and medical situations.
Recently, Nathan and I came across this problem between a few siblings regarding their parent. Everyone believed they knew best and everyone wanted to “help” her. The question becomes: how can WE help her realize what is in her best interest.
When talking about incapacity and their finances, most people say things like: “I won’t care; I don’t have enough assets; I trust my child X; My child X is on my bank account.” This client just wanted someone to be able to pay bills. They were older and tired of doing this.
You may be thinking: “I will always want to pay my bills and be in control of my own money.” But, what if the unthinkable occurs and you are unable? What if you are in a car accident? Dementia is on the rise. Spouses can outlive each other by decades. Children predecease their parents. The list goes on and on.
The first hurdle when considering these financial decisions is "Who do you trust to go into your bank accounts? Who do you want to be able to pay your bills for you? Why do you have to plan for this?" One answer is conservatorship.
What are the issues with a conservatorship? The three that immediately come to mind are:
(1). The time it takes to get the Letters of Conservatorship granted is approximately three months. What will happen to your house or your car if no one can pay your bills for three months?
(2). Fees. Depending on your amount of assets, the person applying may need to qualify for, pay for, and issue a bond to the court. Not to mention that the cost of the petition is nearly six-hundred dollars ($600.00) without accounting for legal fees if you hire an attorney to assist you.
(3). Supervision and reporting. This is not an end all-be all. Your conservator must report to the court upon their appointment and every single year until the conservatorship is over.
How do you avoid these pitfalls? A financial power of attorney. There are, of course, forms available online though do you really trust a website to help you understand the consequences of your decision? Do you really want to run the risk of the last three problems I mentioned?
The second hurdle is medical decisions. Being an only child, I hate to think about having the make choices about my parents’ end of life decisions. Many of you have already been through this with a parent or watched your parents deal with this dilemma with a grandparent. You can make this easier on your family. You have the ability to make these decisions and guide them through how you wish to be treated.
This can sometimes become a difficult decision and the healthcare directive, which replaced the living will and healthcare power of attorney in 2007, is extremely confusing. The alternative is guardianship. The same problems arise: (1) Time; (2) Fees; and (3) Reporting every year.
As an acting guardian ad litem for the probate court I have seen the consequences of not planning for incapacity first hand in over thirty cases. It is not a simple process and it can be both confusing and terrifying for family members. The time lag between filing for guardianship and/or conservatorship and receiving these powers from the court can be very problematic, being between thirty and forty-five days. Think about a person not being able to pay your bills for thirty to forty-five days there are a lot of negative consequences that can come from this situation.
Make this process easier on your family. Make this process easier on you. Most of all, think about the last time you needed an umbrella; if you had brought it the rain wouldn’t have come down, right?
A little bit of foresight and pre-emptive action can prevent these situations from becoming unnecessarily complicated.