Month: July 2015

Legal Issues when someone has Dementia – Update Beneficiary Designations

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This week’s blog continues the discussion of Legal Issues when someone has Dementia.  The introductory installment (April 30, 2015) put forth the issue of “Who can speak for someone with dementia?”  The May 14, 2015 installment discussed the situation where the person with dementia has Advance Directives in place.  The May 21, 2015 installment discussed the legal issues in determining whether a dementia sufferer can choose to have new Advance Directives prepared.  The May 30, 2015 installment discussed options in preparing a Health Care Power of Attorney.  The June 4, 2015 installment discussed how to decide whether to prepare a Living Will.  The June 11, 2015 installment discussed some of the basic issues in preparing a General Power of Attorney.  The June 18 installment discussed the importance of making the General Power of Attorney “durable.”  The June 25 installment discussed the importance of NOT making the General Power of Attorney “springing.”  The July 2 installment discussed revoking prior Powers of Attorney.  The July 9 installment discussed Do Not Resuscitate orders.  The July 16 installment discussed the Right of Disposition designation.  The July 23 installment discussed the Will (or Last Will and Testament.)  Today’s installment will discuss beneficiary designations on life insurance policies, IRAs, annuities, etc.

Today’s installment continues the discussion of issues to manage when someone finds out that he or she has a disease that causes dementia.  These issues should be managed before the dementia gets worse, taking away the person’s ability to make decisions.

One of these decisions to make before the dementia gets worse is to decide who should be the designated beneficiaries on the person’s various financial accounts.  Life insurance policies, IRAs, 401Ks, and annuities usually ask for beneficiaries to be named when the accounts are first set up.  Bank accounts; investment accounts; real estate records; and auto, truck, boat, etc. title do not automatically ask for beneficiaries but may have beneficiaries (or an equivalent designation) added.  Before the dementia gets worse, the person with dementia should visit/revisit the question of whom to name.  Before the person with dementia loses the ability to remember whom he or she holds dear, he or she should look out for loved ones by naming beneficiaries or changing beneficiaries.

Starting with the accounts on which beneficiaries are usually listed, the person with dementia should see whom (if anyone) is designated as the beneficiary on life insurance policies, IRAs, 401Ks, (and any other similar retirement plans,) and annuities.  The policy or account may have been set up long ago, perhaps before the person’s children were born and perhaps even before marriage or the establishment of a similar long-term relationship.  If so, the beneficiary designations are probably inappropriate now.  They should be updated.

On bank accounts, investment accounts (, non-tax-deferred accounts,) real estate, and auto/truck etc. titles, it may be possible to name beneficiaries, but the beneficiary designation may have a different name.  It might be a Transfer on Death designation, or a Pay on Death designation.  For real estate, it might be a Transfer on Death Deed or, like in Ohio now, a Transfer on Death Affidavit that contains instructions on preparing a deed to carry out the transaction to the designated beneficiary.  Ohio auto title documents allow the designation of someone to get ownership of the automobile upon the death of the listed owner.  Because boats, trucks, personal watercraft, trailers, and several other kinds of “rolling stock” use similar title records in Ohio, a Transfer on Death is allowed for these boats, trucks, etc. as well.  (Automobile titles are covered by state law, so other states may or may not have allow the designation of a new owner for rolling stock in the way that Ohio allows.)  It’s always a good idea to consider using the available beneficiary designations (by whatever name.)  It’s an especially good idea to use them or to confirm them when dementia has started.

When the person with dementia looks at his or her beneficiary designations, no changes may be needed.  Perhaps he or she kept up with changing family circumstances.  Most people don’t keep up with those changes, though.

An account or policy or real estate holding, etc. may have been opened or created when the person with dementia was a young adult.  (For ease of discussion, we’ll just refer to everything as an “account” for the rest of this discussion.)  The account may designate a parent as the beneficiary.  The parents may have passed away.  The person with dementia may have a spouse or other long term relationship.  He or she may have children or grandchildren.  The older the account, the more likely that a beneficiary update is necessary.

The person with dementia may previously have named a spouse as beneficiary on some or all of the accounts.  The spouse may have passed away.  The spouse may be in long term care and may have Medicaid coverage or VA benefit coverage.  If any of these have occurred, the beneficiary designation may need changed away from the spouse.

If a child or grandchild (or anyone else, for that matter) is named as beneficiary and that person has his or her own disability or medical difficulties, the child/grandchild may not be an appropriate choice as a beneficiary.  If he or she receives government benefits (like Medicaid, SSI, or VA benefits) because of the disability or medical challenges, the arrival of new money (or anything else of value) might suspend the government benefits until the newly arrived asset is exhausted.  That loss of government benefits is a net financial loss to the family.

A future installment in this series will discuss working with an elder law attorney.  The elder law attorney may have suggestions on beneficiary designations that come from the experience helping people who need long term care.  Those suggestions may be different than the choices the person with dementia would have made by himself or herself.

In summary, when someone learns that he or she is suffering from an early stage of dementia, he or she should look at where he or she has or can designate beneficiaries to receive assets upon the person’ death (in addition to following the other suggestions made within this ongoing discussion.)  The person should take the opportunities to name beneficiaries where they have not been beneficiaries before.  The person should also make sure that the already-completed beneficiary designations are still the appropriate ones.  As the person with early-stage dementia should realize, circumstances can change.  Some plans may have to be changed to keep up.

Legal Issues when someone has Dementia – Consider a Will

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This week’s blog continues the discussion of Legal Issues when someone has Dementia.  The introductory installment (April 30, 2015) put forth the issue of “Who can speak for someone with dementia?”  The May 14, 2015 installment discussed the situation where the person with dementia has Advance Directives in place.  The May 21, 2015 installment discussed the legal issues in determining whether a dementia sufferer can choose to have new Advance Directives prepared.  The May 30, 2015 installment discussed options in preparing a Health Care Power of Attorney.  The June 4, 2015 installment discussed how to decide whether to prepare a Living Will.  The June 11, 2015 installment discussed some of the basic issues in preparing a General Power of Attorney.  The June 18 installment discussed the importance of making the General Power of Attorney “durable.”  The June 25 installment discussed the importance of NOT making the General Power of Attorney “springing.”  The July 2 installment discussed revoking prior Powers of Attorney.  The July 9 installment discussed Do Not Resuscitate orders.  The July 16 installment discussed the Right of Disposition designation.  Today’s installment will discuss the Will (or Last Will and Testament.)

Please remember, the last several week’s installments have discussed the decisions and preparations that someone can make when he or she has dementia but the dementia isn’t advanced.  The dementia hasn’t yet taken away the person’s decision-making capacity.  Today’s discussion of a Will continues in that same vein.

A Will may not seem as though it’s important to the care that a dementia sufferer might require in the future or to the handling of that dementia sufferer’s medical and legal affairs as the disease progresses.  That impression is correct.  The Will isn’t important for a dementia victim’s medical or legal affairs related to the disease.  The Will might, though, be important to the person’s peace mind.

Someone with dementia is likely to have few or no financial assets when he or she dies.  The medical and custodial services of long term care that dementia requires could use up the person’s savings and income before his or her death (especially if the person did not get help from an elder law attorney.)  Alternatively, the person’s assets might be protected from the costs of long term care (usually through the help of an elder law attorney,) but the sheltered assets rarely belong to the dementia sufferer after they’ve been sheltered.  So, either way, someone with dementia should not expect to have financially significant assets at the time of death.  So, one might ask, what good is a Will to someone with dementia.

First, some people facing what will be their final illness want to avoid worrying if their “affairs are in order.”  No matter how little someone with dementia might expect to have when they die, they still might want to make provisions for what there will be at that time.  It can help anyone (suffering from dementia or not) feel as though he or she has done all in his or her power to look out for loved ones whom they will leave behind.  Often, there is a cathartic value in such preparations.

Second, the value of a will isn’t just financial.  It is true that most people think of a Will as divvying up the bank accounts, land holdings, corporate ownership, automobiles, and valuable antiques that belonged to someone who has passed away.  For many (perhaps even most) families, though, the Will is how items of sentimental value find their new homes.  Almost no heir cries when receiving a stock portfolio.  Many heirs cry, however, when they receive Great-Grandma’s wedding band, the antique desk that belonged to a beloved uncle, or some other piece of the family heritage.  These sentimental or historical family heirlooms don’t mean much to the bankers and credit card companies that served our parents and grandparents, but they often mean a great deal to us, our children, and our grandchildren.  One cannot place a dollar value on a shared family heritage or a sentimental memory.

To make it easier for someone to designate heirs on sentimental items, in some states, a formal Will isn’t necessary.  Some states allow a simple list of items and heirs that does not need witnessed or notarized or whatever other method might be required to authenticate a formal Will.   Preparation of this informal list can have the same cathartic effect as a Will.

To be sure, it is better to have a Will than not to have one.  Plenty of people (with or without dementia) failed to prepare Wills thinking that their assets would not justify the trouble.  Often, these people overlooked some of their assets or assumed a wildly low value for some of their assets.  Other people have inherited assets late in life, after dementia has taken away their decision-making ability, and it was too late to create a Will.  To avoid these problems, a simple Will is a good idea (even if a list of heirs for the sentimental items is prepared separately.)

A simple will should designate an executor or executrix.  (Executor is male, like steward.  Executrix is female, like stewardess.)  It should also name one or more successors, in case the designated executor or executrix can’t serve or can’t complete the job.

A Will should also the ability to dispose of (sell, give away, etc.) any assets that aren’t already designated in the Will or in the list of personal/sentimental items.  Disposition of real estate should specifically be listed in the powers of the executor or executrix.  Including these powers can, in some states, help the executor/executrix avoid seeking probate court permission to dispose of these assets. (The necessity to seek court permission adds costs and delays to the probate process.)

A Will should also include a “residual beneficiary” clause.  A residual beneficiary is the heir (or heirs) designating who gets anything from the estate that isn’t specifically listed somewhere.  The beneficiary, though, isn’t really the important part of this clause (expect, perhaps, to the beneficiary or beneficiaries.)  The important part of the clause is the “residual” part.  The “residual” part, because it catches any asset that wasn’t specifically listed elsewhere, keeps the previously-overlooked asset (like a forgotten bank account) or the late-in-life acquisition (like an inheritance received after the dementia had advanced) from being lost in limbo, without an instruction what to do with it.

In summary, even though a dementia sufferer may not expect to have significant financial assets, a Will can be valuable.  It can provide peace of mind and the cathartic feeling of having things settled.  It can also provide for sentimental or historical items.  Finally, it can make preparations for surprises that might happen after the dementia has advanced.

Even a dementia sufferer should consider a Will if he or she still can.

 

Legal Issues when someone has Dementia – Consider a Right of Disposition Designation

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This week’s blog continues the discussion of Legal Issues when someone has Dementia.  The introductory installment (April 30, 2015) put forth the issue of “Who can speak for someone with dementia?”  The May 14, 2015 installment discussed the situation where the person with dementia has Advance Directives in place.  The May 21, 2015 installment discussed the legal issues in determining whether a dementia sufferer can choose to have new Advance Directives prepared.  The May 30, 2015 installment discussed options in preparing a Health Care Power of Attorney.  The June 4, 2015 installment discussed how to decide whether to prepare a Living Will.  The June 11, 2015 installment discussed some of the basic issues in preparing a General Power of Attorney.  The June 18 installment discussed the importance of making the General Power of Attorney “durable.”  The June 25 installment discussed the importance of NOT making the General Power of Attorney “springing.”  The July 2 installment discussed revoking prior Powers of Attorney.  The July 9 installment discussed Do Not Resuscitate orders.  Today’s installment will discuss the Right of Disposition.

The Right of Disposition is a short name for the right to make decisions about and arrangements for someone’s funeral and the disposition of that someone’s bodily remains. In other words, the person who has control over a deceased person’s funeral has the Right of Disposition.

In Ohio (where I practice,) the Right of Disposition is controlled by Ohio Revised Code section 2108. If the deceased person did not make a written designation to put someone in charge of his or her final arrangements, the Ohio statute has a system to determine who is in charge. (It’s not terribly different from the statutory system in state law that sets out inheritance from someone who didn’t leave a will.) Under Ohio law, in the absence of a written designation, the right of disposition goes to (in order):
– Spouse,
– Children,
– Parents,
– Siblings,
– Grandparents,
– Grandchildren,
– Lineal Descendants of Grandparents,
– Guardian when the person was living,
– Personal Representative for the Estate, or the Funeral Director who has the remains or anyone else willing to take responsibility, or
– The Public Official for the person’s public benefits if the person was indigent.

Under the law, there is always someone who has the Right of Disposition. So, why bother to designate anyone?

Many people, late in life, grow close to someone but they never marry. Often, widowed men and women have a long relationship (perhaps intimate, perhaps not.) Sometimes, the family of one of these people do not accept the relationship with the new person. (Usually, it’s the children that do not accept the new person because they don’t want a “replacement” for their deceased parent or they see this new relationship as their living parent being “unfaithful” to the deceased spouse.

If someone grows close to someone else late in life, he or she might want to give the right of disposition to that new “partner” (for lack of a better term.) If, by operation of law, the children have the Right of Disposition, the children may exclude the person who was their parent’s late-in-life partner. (Remember, the children might not have approved of the relationship.) Imagine the partner not being able to say “goodbye.” (Until the recent Supreme Court decision, this was a frequent issue for same sex couples because they could not marry in Ohio.)

Designating someone to have the Right of Disposition isn’t a necessity. For someone who has a partner or close friend in a late-in-life relationship, it might make the difference in having a chance to be there for the funeral.

Legal Issues when someone has Dementia – Consider a Do Not Resuscitate Order

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This week’s blog continues the discussion of Legal Issues when someone has Dementia.  The introductory installment (April 30, 2015) put forth the issue of “Who can speak for someone with dementia?”  The May 14, 2015 installment discussed the situation where the person with dementia has Advance Directives in place.  The May 21, 2015 installment discussed the legal issues in determining whether a dementia sufferer can choose to have new Advance Directives prepared.  The May 30, 2015 installment discussed options in preparing a Health Care Power of Attorney.  The June 4, 2015 installment discussed how to decide whether to prepare a Living Will.  The June 11, 2015 installment discussed some of the basic issues in preparing a General Power of Attorney.  The June 18 installment discussed the importance of making the General Power of Attorney “durable.”  The June 25 installment discussed the importance of NOT making the General Power of Attorney “springing.”  The July 3 installment discussed revoking prior Powers of Attorney.  Today’s installment will discuss Do Not Resuscitate orders.

Do Not Resuscitate orders are hard.  Choosing to execute a Do Not Resuscitate order is a decision to allow death to take you (in the event that the lungs or heart stop.)  Choosing a Do Not Resuscitate order (We’ll call it a “DNR” frequently through the rest of this discussion.) is like choosing to execute a Living Will (discussed in the June 4, 2015 installment.)  The difference between a DNR and a Living Will is a difference in the part of the body that is giving out.  With a Living Will (at least for the purposes of this ongoing blog about dementia sufferers,) the brain has given out.  With a DNR, the heart or lungs have given out.  A DNR and a Living Will are similar in that the person executing (Please remember from our earlier discussions, “executing” a document is a fancy way of saying that someone signed a document that has some legally significant result.) a DNR or Living Will is documenting a decision to be allowed to die from something that hasn’t happened yet.  With a Living Will, the principal (the person who executes the document) has chosen to let his or her body die if, in the future, his or her brain dies.  With a DNR, the principal is choosing to die from a heart attack or respiratory distress that might happen in the future.  (Just to avoid some reader’s confusion, a Living Will is, in effect, a DNR for someone whose conscious brain has died while the autonomic nervous system is still keeping the vital organs going.  If someone is in a persistent vegetative state and has executed a Living Will, that person will not be rescued from a heart attack or respiratory distress, in keeping with the wishes expressed in the Living Will.  The possible causes of death of the body of the principal on a Living Will are not limited to heart and lung failures, though.)

Why would anyone choose to allow themselves to die from a heart attack or respiratory distress that hasn’t yet (and may never) occur?  In most cases, the principal chooses a DNR because the principal is facing some ailment that will lead to death in a more unpleasant way than a heart attack or respiratory failure.  For example, someone suffering from an advanced cancer (for which no treatment is expected to help) might expect a long, painful death.  Such a person might wish to die quickly from a heart attack rather than slowly from cancer.  Such a cancer sufferer executing a DNR is NOT asking for a heart attack.  The cancer sufferer who executes a DNR is telling the world, in effect, “Please don’t bring me back from a heart attack because bringing me back will make me continue to suffer the pain of my cancer for a while longer.”

Someone suffering from dementia might wish to make the same choice.  Someone suffering from dementia might wish to allow a heart attack to take them quickly than suffer through the prolonged decline of dementia.  I certainly don’t advocate executing a DNR, but I think I can understand why a dementia sufferer might want to have one.

Now, to be clear, the dementia sufferer that we are talking about is someone who has dementia but not advanced dementia.  To legally execute a DNR (like with a Health Care Power of Attorney, Living Will, or General Power of Attorney,) the principal must understand what he or she is doing (according to the law in Ohio, where I work.)  To have the ability to understand, the principal’s dementia must not be advanced.

Unlike a Health Care Power of Attorney. a Living Will, and a General Power of Attorney that have been discussed in prior installments, the principal cannot execute a DNR by himself or herself.  All DNRs (in Ohio, anyway) require the signature of a physician, certified nurse practitioner, certified nurse specialist, or physician assistant.  The co-signature by the medical professional is a way to make sure that someone isn’t executing a DNR out of depression or some wish to die.

In summary, in addition to the Health Care Power of Attorney, Living Will, and General Power of Attorney discussed previously in this series, someone who has dementia that is not yet advanced may wish to consider a Do Not Resuscitate order.

Legal Issues when someone has Dementia – Revoke prior Powers of Attorney

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This week’s blog continues the discussion of Legal Issues when someone has Dementia.  The introductory installment (April 30, 2015) put forth the issue of “Who can speak for someone with dementia?”  The May 14, 2015 installment discussed the situation where the person with dementia has Advance Directives in place.  The May 21, 2015 installment discussed the legal issues in determining whether a dementia sufferer can choose to have new Advance Directives prepared.  The May 30, 2015 installment discussed options in preparing a Health Care Power of Attorney.  The June 4, 2015 installment discussed how to decide whether to prepare a Living Will.  The June 11, 2015 installment discussed some of the basic issues in preparing a General Power of Attorney.  The June 18 installment discussed the importance of making the General Power of Attorney “durable.”  The June 25 installment discussed the importance of NOT making the General Power of Attorney “springing.”  To continue the discussion of which Advance Directives to prepare and how to prepare them, today’s installment will discuss revoking prior Powers of Attorney.

This issue applies to anyone revoking a Power of Attorney not just those that have dementia.  For someone with dementia, though, revoking a Power of Attorney has more urgency – more reason for haste – than it does for someone who does not have dementia.

If the principal adopts a new Power of Attorney (whether a General Power of Attorney or a Health Care Power of Attorney,) prior Powers of Attorney are NOT automatically revoked (at least not in Ohio.)  So, if a principal adopts a new Power of Attorney, the old one (perhaps more than one) are still legally valid and active.  To avoid these “battling” POAs, the principal should revoke the prior POAs.

Frequently, a new POA will state that it revokes all prior Powers of Attorney.  That would seem to solve the problem.  It is better to list the prior Powers of Attorney so as to minimize confusion, but as a legal matter, that list may not be necessary.  (Of course, because lawyers want to make sure that all bases are covered, it is wise to use language such as “I hereby revoke all prior General Powers of Attorney, including, but not limited to the General Powers of Attorney that I previously executed on January 1, 2000; February 1, 2001; and March 1, 2002.”  (A principal should not revoke “ALL prior Powers of Attorney” but should, instead, revoke “all prior General Powers of Attorney” or “all prior Health Care Powers of Attorney.  A principal should specify which type of POA he or she intends to revoke.)

In addition, the principal can sign a document that revokes prior Powers of Attorney even if the new document isn’t itself a Power of Attorney.  As  discussed in the paragraph immediately above, this stand-alone revocation can be a blanket revocation of all prior Powers of Attorney (General or Health Care,) or can list the Powers of Attorney that it revokes, or can do both.

Seems easy, right?  Sign one document, and the out-of-date POAs get revoked.  No sweat.

Of course, it’s not that easy.

Just because the principal has revoked an old version of the Power of Attorney, the person reading the POA doesn’t know that it has been revoked.  Revoked POAs don’t simply disappear.  They don’t shrivel up and disintegrate.  They don’t instantly have “REVOKED” printed on them.

The agent named in a now-revoked POA may not be happy about being replaced.  That deposed agent may use the authority in the old POA to take actions with the principal’s assets.  The bank or investment office or real estate agent (or anyone else, for that matter) has no way to know that the POA has been revoked.  (Not many former agents would act out in this manner, but those few that would certainly can hurt their principals.)

To avoid an old POA being accepted as current, there are practical steps (in addition to the legal steps) to revoke an old POA.

The principal should try to retrieve all of the copies of the prior POAs.  Retrieving all of them can be a daunting task if there are a number of copies.  (Most POAs have a statement that a copy is to be honored just like an original, so retrieval of copies is important.)

After the copies of the prior POA have been retrieved, most of them can be destroyed.  I suggest that the principal keep one of them.  It should be marked “REVOKED” in prominent letters on each page (especially the front page and the signature page) along with the date of the revocation.  I suggest keeping the old POA because it might at some point be necessary to prove that an agent’s action prior to the old POA’s revocation was valid, and the old POA might be necessary to prove that validity.

In addition, notice of the revocation should be provided to the principal’s bank, investment office, etc.  (or doctor’s office, hospital etc. for a Health Care POA.)  Similarly, notice of the revocation should be provided to all prior agents and successor agents.  (The notice to so many people makes a stand-alone revocation better than a revocation inside the new POA.  The revocation can be copied and sent around without having to send around a large number of copies of the new POA because that new POA might need to be revoked in the future.)

So, with possible revocation in mind, new POAs (and first POAs, for that matter) should not be spread far and wide.  They might have to be retrieved later.  The principal should keep an original.  The primary agent should keep an original.  The attorney who prepared it should probably keep an original.  Maybe the first one or two successor agents should have an original.  In any event, the principal should keep track of where he or she sends originals and copies so that they can be retrieved later, if necessary.

Yeah, that’s a pain in the neck.  Sorry, but I it might be necessary to have that list in case you change your POA in the future.