Families often ask what they need to do to get their affairs in order, especially after receiving a diagnosis of Alzheimer’s disease or other form of cognitive impairment.  The key documents authorize specific people or institutions to take care of your finances or make medical decisions when you are unable to do so. Here is a brief overview of the types of documents that you may need to prepare.

1. Power of Attorney. This document authorizes one or more people (agents) to take care of your financial affairs if you are unable to do so. You can tailor this document broadly or narrowly to meet your situation. For example, a power of attorney may be used by:

• Someone facing major surgery who wants to designate an agent to pay bills or sign specific documents during the period of surgery and convalescence;
• An aging parent who wants to authorize an adult child to take over all bill paying responsibilities, investment decisions, and the management of other financial issues for the foreseeable future

2. Durable Power of Attorney. Powers of attorney expire either upon the date or event specified in the document itself, or when the creator is determined to be incompetent. For families living with someone with cognitive impairment, the expiration of a power of attorney under this circumstance is a significant problem. The solution is to create a durable power of attorney, a form of a power of attorney that the law recognizes as valid even when the creator is incompetent.

3. Health Care Proxy. This basic document identifies the person (the proxy) you want to make health care decisions on your behalf in the event you are unable to make these decisions yourself. Different states have taken different approaches to documenting a person’s health care preferences, to be followed in the event that the person cannot speak for him or herself, so you must know the law in the state in which you reside. In Massachusetts, you can obtain forms from hospitals, physicians, or here. You do not need an attorney to complete the basic form.

 

You can provide further written direction to your proxy as to what you do or do not want, but such information is optional. When operative, physicians will ask the proxy to advise them what the patient would decide, were the patient able to participate in the decision.

4. Making sure the documents are honored. One of the challenges of these planning documents is making sure that they are on file in the right places. Your agent under a power of attorney needs to have originals of the document, but you should also give them to give to your bank, financial advisors and others who provide financial services to you.  Often institutions are reluctant to honor powers of attorney that were signed years ago. It can be very helpful to call the specific institutions and find out their policies on accepting powers of attorney.

Your health care proxy does not belong in your safe deposit box! And while your attorney may want a copy, it is not its primary home. Your health care proxy is a directive to your treating physicians and all of them should receive a copy. Your proxy should have an original as well. Many physicians and hospital systems now add health care proxy information into their electronic medical record. Ask your doctor if your proxy is in the medical record and make sure that the record is updated if you make a new health care proxy.

5. What Happens If You Are Already Experiencing Cognitive Impairment? It is not unusual for people to put off getting their affairs in order. Questions arise whether it is too late for someone who has memory loss to execute these types of documents. With regard to health care proxies, the prevailing view in Massachusetts is to assume that someone with cognitive impairment is still able to designate a person to make health care choices for them, unless they manifest a lack of understanding.  The view is that even if people are no longer able to understand the intricacies of health care decision making, they know the people that they trust and want to represent them.

 

Questions about the ability of someone with cognitive impairment to sign powers of attorney, or a will allocating assets after death, have less certain answers.  The family should confer with the treating physician to determine if the physician believes that the patient is able to understand the implications of these documents. If so, they can be drawn up, but a letter of competency signed by the physician should be attached.