Family Caregiver Alliance
Legal Planning for Incapacity
Q: What legal matters should be discussed when a family member
has Alzheimer's Disease or another brain disorder?
There are several legal issues to consider when a person is (or may
- The management of the person's financial affairs during his or her
- The management of the person's personal care, for example, medical
decisions, residence, placement in a nursing facility, etc.;
- Arranging for payment of long-term care-use of private insurance,
Medicare, Medicaid (Medi-Cal in California) and Supplemental Security Income (SSI);
- Preserving the family assets-ensuring that the patient's spouse and
family are adequately protected; and
- The distribution of the person's assets on his/her death.
Q: When should an attorney be consulted?
Consult an attorney as early as possible. The maximum number of planning
options will be available while the patient still has the legal capacity to make his or her own decisions. The question of
capacity is a gray area, and it has to be determined on a case-by-case basis.
Q: What are the options for managing assets?
There are various options for managing assets, including:
- Durable powers of attorney;
- Revocable living trusts;
- Designation of a representative payee; and
- Conservatorship of the estate and of the person. Each of these has
advantages and disadvantages which should be discussed thoroughly with an attorney. Further, for making medical decisions,
you would want to discuss the use of a durable power of attorney for health care, directive to physicians, and conservatorship
of the person.
Each of these has advantages and disadvantages which should be discussed
thoroughly with an attorney. Further, for making medical decisions, you would want to discuss the use of a durable power of
attorney for health care, directive to physicians, and conservatorship of the person.
Q. What are the options for paying for long-term care?
Investigate first the availability of private insurance to cover long-term
care, whether at home or at a skilled nursing facility. Also examine the government benefit programs that may be available
to the care recipient, such as Medicare, Medicaid or Medi-Cal, Supplemental Security Income (SSI), and In-Home Supportive
Q: What can be done to preserve assets if a patient needs custodial
care in a skilled nursing facility?
Various planning strategies may be utilized to preserve assets by
obtaining Medi-Cal eligibility. The appropriate strategy will depend on the individual's circumstances, i.e., marital status,
mental capacity of the care recipient, and age and health of the care recipient.
- Converting non-exempt assets into exempt assets;
- Transfer of the family residence to a spouse;
- Transfer of the principal residence with the retention of a life
- Use of court orders to increase the amount of resources and/or income
the spouse of a nursing home resident can retain;
- Gifting of assets. Each of these options has significant implications
and should be thoroughly discussed with an attorney knowledgeable in Medicaid or Medi-Cal law.
Attorney-in-Fact. The person named in a Durable
Power of Attorney to act as an agent. This person need not be an attorney.
Beneficiary. An individual who receives the benefit
of a transaction, for example, a beneficiary of life insurance policy, a beneficiary of a trust, beneficiary under a Will.
Conservatee. The incapacitated person for whom
a conservatorship has been established.
Conservator. An individual who is appointed by
the court to act on behalf of an incapacitated person.
Conservatorship. A court proceeding in which the
court supervises the management of an incapacitated person's affairs and/or personal care.
Directive to Physicians. A written document in
which an individual states his or her desire to have life-sustaining procedures withheld or withdrawn under certain circumstances.
This document must meet certain requirements under the law to be valid.
Durable Power of Attorney for Health Care. A document
in which an individual nominates a person as his or her agent to make health care decisions for him or her if he or she is
not able to give medical consent. This document can give the agent the power to with- draw or continue life sustaining procedures.
Durable Power of Attorney for Asset Management.
A document in which an individual (the "principal") nominates a person as his or her agent (attorney-in-fact) to conduct financial
transactions on his or her behalf. This document can be either "springing," which means that it is effective only upon the
principal's incapacity, or "fixed," which means that the document becomes effective when it is signed.
Executor. The individual named in a Will who is
responsible for administering an estate during probate. The Executor is the person responsible for making sure all taxes and
other expenses are paid and distributing the property of the deceased person in accordance with the Will.
Federal Estate Taxes. A tax that is due at death
if the estate exceeds $650,000 (current as of 1999) and is calculated on the value of the deceased person's estate at the
time of death.
In-Home Supportive Services (IHSS). A state program
that pays for non-medical services for persons who meet certain financial criteria and who could not remain safely at home
without such services.
Irrevocable Trust. A trust which has terms and
provisions that cannot be changed.
Joint Tenancy. A form of property ownership by
two or more persons designated as "joint tenants." When a joint tenant dies, his or her interest in the property automatically
passes to the surviving joint tenant and is not controlled by the Will of the deceased joint tenant and is not subject to
Life Estate. An interest in property that lasts
for the life of the person retaining the life estate. When a person who has a life estate interest dies, the property passes
to the person holding the remainder interest, without the need for probate.
Living Will. A written document in which an individual
conveys his or her desire to die a natural death and not be kept alive by artificial means. Unlike a Durable Power of Attorney
for Health Care, the wishes in this document are not legally enforceable in California.
Medi-Cal. A state and federally financed program
that provides medical care to low income persons.
Medicaid. The program equivalent to Medi-Cal in
states other than California.
Medicare. A federal medical coverage program for
persons who are over 65 years old or who are disabled. It is funded by Social Security deductions and it has no income or
Probate. The court proceeding which oversees the
administration of a deceased person's estate. Wills are subject to probate, living trusts (if properly funded) are not.
Revocable Living Trust. A device that describes
certain property, names a trustee (who manages the property) and names a beneficiary who receives benefit from the trust.
A living trust is an effective means of avoiding probate and providing for management of assets. It can be revoked by the
person who created it during that person's lifetime.
Social Security Retirement Benefits. Benefits
which eligible workers and their families receive when the worker retires. The worker must work for a specified period at
a job that is covered by Social Security in order to be eligible for benefits. A worker must be at least 62 to receive retirement
Social Security Disability Benefits. Social Security
benefits that are payable to disabled workers and their families.
Special Needs Trust. A specially drafted trust
that provides a fund to supplement the governmental benefits of a beneficiary while not affecting that beneficiary's eligibility
for public benefits.
Supplemental Security Income (SSI). A federal
program which provides cash assistance to the aged, blind and disabled who have limited income and resources.
Testator. The person who executes a Will.
Trustor (Settlor). A person who creates a trust.
Trustee. The individual who is responsible for
managing the property in the trust for the benefit of the beneficiary.
Will. The document a person signs which tells
how he or she wants his or her estate administered and distributed upon death. It must conform to certain legal requirements
in order to be valid. The terms of a Will become operational only upon the testator's death.
Souce: FCA http://www.caregiver.org/factsheets/legal_planning.html