asset protection

Can Somebody with Dementia or Alzheimer’s Make a Will?

Yes, but there may be a point where this becomes impossible.

Families often face a difficult situation when they receive a Alzheimer’s or dementia diagnosis.  Often, the signs preceded the diagnosis.  Whether an individual is dealing with a suspicion or “official” diagnosis, there may still be an opportunity to create an estate plan.   In fact, there is a great need to do so.

Good News, Estate Planning is Possible

Everybody over the age of 18, even those with a disease affecting their brain, is presumed to be competent to create a will.   This means that they have “testamentary capacity”.  Even if somebody has been determined by a court to be incompetent, there may be times when the person may have lucid intervals when he knows the extent of his estate and who should receive the inheritance.

Nature of Dementia, Windows of Opportunity

Most of us who have been around suffers of dementia realize that it is not an all or nothing condition.  For example, the term “sundowners” unsplash-windowrefers to the worsening of dementia in the late afternoon or evening.  At those time, individuals may hallucinate, become agitated or paranoid.  See  Strangely, for some of these people the conditions disappear or lessen the next morning.

Generally, dementia such as Alzheimer’s is progressive.  However, the rate that it progresses varies.  According to[i]

The symptoms of Alzheimer’s disease worsen over time, although the rate at which the disease progresses varies. On average, a person with Alzheimer’s lives four to eight years after diagnosis, but can live as long as 20 years, depending on other factors.

From a planning perspective, it is best to draft and sign essential estate and asset planning documents early.  These may include:

  • Powers of Attorney

  • Wills

  • TrustA photo by Sonja Langford.

  • Advanced Healthcare Directives (Living Wills)

  • HIPAA Releases

Concerns about Long Term Care

In addition, this is an ideal time to make plans for governmental programs that can help pay for care.  For example, Medicare does not pay for long-term care in a facility.  However, Medicaid can be an option to explore.  Also, veterans, their spouses and widows can be eligible for certain pensions such as the VA Wartime Pension also know as Aid and Attendance.  However, both Medicaid and certain VA benefits are needs based.  This means that those with too much income and or too much in net worth may not be eligible for these programs.  However, individuals can become eligible without losing their life savings.

In short, when a diagnosis occurs, it is a good idea to consult with an elder law attorney who has knowledge about the disease, the needs of the family and how to navigate through the Medicaid and VA eligibility requirements.  However, failure to take advantage of the opportunity to plan may result in the need of guardianship or other court administered processes.


A Child’s Husband or Wife if Often a Concern During Estate Planning

Let’s face it, not everyone is crazy about their in-laws.  Whether it is greed, money problems, maturity, substance abuse or a possible divorce; these things create concerns when deciding how to pass along an inheritance.

How is an Inheritance Treated During Divorce?  In Oklahoma.

Theoretically, things or money your kid inherits is their separate property.  However, this can change if assets are co-mingled.  One example is an inheritance deposited into a joint account.  Transmutation is the act of changing separate property into joint property by gift, use or titling.  In a divorce setting these assets should not be included in a property division.  In reality, the ownership often becomes blurred when the other spouse gains title, has access or helps maintain the property.

Manipulative, Demanding, or Stealing In-Laws

Sometime the worry is not divorce but a continued marriage with a spouse who’s need for resources never runs dry.  In these situations a Trustee can prevent wasting of an inheritance.

 Lifetime Trusts:

A Trust splits the legal and beneficial ownership from property.  The Trustee is the person or company that holds title.  However, the Trustee can only use the property for the beneficiary.

Example 1:  The Smith Trust purchases a home for the benefit of Sally.  Sally lives in the home but her name is not on the title to the property.  If Sally’s is legally unable to sell, mortgage or give it to anybody else because only the Trustee has this power.  Sally’s husband cannot force her to do anything with regard to that asset.  The Trustee can sell the property if Sally’s needs change.

Example 2:  The Smiths want leave money to their son.  His demanding wife had credit, gambling, and/or alcohol problems.  The funds a placed in Trust so that the Trustee can manage the money.  The Trustee has sole discretion on how and when money is released for son’s benefit.

In both examples the assets in the Trust are not available to the divorcing spouse.  This is because the assets are not “owned” but the child.

Protecting Your Children by Protecting Their Inheritance


Providing Asset Protection for Your Kids

Providing an inheritance for one’s children is a common desire among the current generation of middle aged Americans. Protecting that inheritance may be something that many of us overlook when planning for the future. After all, the assets to be handed down represent a lifetime of work and careful stewardship; generations of family owned land or a family run business hold financial value as well as emotional ties that run deep. Knowing that this inheritance, once handed down to the children, could potentially be at risk through liquidation from creditors or poor financial habits of the beneficiary motivates good planners to put safeguards in place, preventing future loss.

Know The Number One Rule of Asset Protection: 

Your Kids’ Predators and Creditors Can Get Anything They Control


By crafting an individualized Trust with sound advice from a qualified Estate Planning attorney, the inheritance that you leave can be protected from risk of loss. This can assure that your heirs still receive the financial benefits of the inheritance but do not have full access to the assets. Typically this involves appointing a Trustee to hold title to the property for the benefit of your heir.

Example: A son inherits from his parents and the money is held in a Trust. His sister is the Trustee. The son wants to buy a lake cabin and asks his sister for the money. Instead of writing a check to her brother, the sister (Trustee) uses the Trust funds to purchase the condo in the name of the Trust.   This way, the son uses and enjoys the benefits of the condo but does not own title to it. The Trust owns the title to the condo. It would therefore, not become subject to any creditors or predators that could threaten the asset.  It does not become subject to claims of creditors and predators.

What are the Risks? Who are the creditors and predators?



*Divorce: While technically inherited property is considered separate from marital property, once the assets are inherited without restrictions, they often end up in a common marital pool of ownership. For example, depositing cash into a joint bank account will cause the funds to be commingled. It may also be seen as granting title to the joint account owner. In 2015 alone, Oklahoma had over 21,000 divorce filings.

*Lawsuits and Judgements: In Oklahoma, more than 150,000 civil cases (individuals who were personally sued) were filed in 2015. A litigation target with protected assets is less attractive to an attorney because of the limited ability to collect from any civil law suit.  A trust can render a judgment noncollectable.

*Bankruptcies:  Personal bankruptcies are far too common.  Common causes are medical bills, uncontrolled spending, vehicle accidents and Bankruptcybusiness failures.

*Immature Financial Management Skills: Often a child with poor financial management skills who receives unearned income will be quick to part from the inheritance. Safeguards can be put into place to prevent a child from squandering an inheritance or making foolish investments with the money.

*Mental Health/Substance Abuse: About 4.1% of adults suffer from mental illness. Those with mental illness may lack the necessary skills to make good financial decisions putting the inheritance at risk without the intended benefit. Additionally, drug and alcohol abuse is at an epidemic level in our society. A Trustee can help insure that the inheritance is used to pay for treatment or other beneficial interventions and not being used to further harm a child that suffers from addiction.

*Special Needs: A child who has special needs such as mental or physical disabilities may become disqualified for government assistance like Medicaid or Veteran’s benefits should an inheritance be gained without the protection of a Trust. Careful drafting is required to insure that the trust property in not counted against the person with these challenges.

his hers ours*Blended Families/Remarriage: Many couples with blended families have similar goals. The first is to provide an inheritance for the surviving spouse. An additional goal is often that of insuring that the biological children as well as the step-children are assured the inheritance that is desired. An asset protection plan can protect the surviving spouse and the children from the loss of assets or disrupted estate plans.

*Remarriage: It is not uncommon for a widow to remarry. No estate planning can, or should, prevent this. However, the new spouse may cause assets ultimately intended for the children end up in their or their own kids’ hands.

You Didn’t Earn It for Them to Burn It

What can be done? Estate planning is more than generating documents. Involves counseling to meet the objectives of the client. Proper uses of trusts and other planning tools can insure that your intended beneficiaries receive and enjoy the full value of their inheritance.

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