As the Australian population ages, the incidence of dementia and memory loss in elderly people is increasing. However, estate planning for this scenario is very important. Estate planning should include amending current legal documents, creating plans for your property, discussing health care and potentially naming a Power of Attorney.
Dementia in Australia
Alheimer’s Australia says this about the types of dementia:
Dementia is the umbrella term for a number of neurological conditions, of which the major symptom includes a global decline in brain function.
It is a condition that has been noted in people for hundreds of years.
Dementia was a relatively rare occurrence before the 20th century as fewer people lived to old age in pre-industrial society. It was not until the mid 1970’s that dementia begun to be described as we know it today.
We now know dementia is a disease symptom, and not a normal part of aging.
There are over 100 diseases that may cause dementia. The most common causes include Alzheimer’s disease, vascular dementia and dementia with Lewy bodies.
In Australia, dementia is the second leading cause of death after coronary heart disease. It is the single greatest cause of disability in Australians over the age of 65 years, and the third leading cause of disability burden overall. By 2025 in Australia it is estimated that there will be about 536,164 people with dementia, with that figure rising dramatically by 2056 to about 1,100,890 sufferers.
It is likely that if somebody has been diagnosed with dementia, they will at some point lose the mental capacity to make their own decisions. Dementia doesn’t always mean that a person lacks the necessary capacity to write a will. The degree of illness and how it has affected their cognitive function means that this type of dispute will have to be made on a case by case basis. A legal professional will take detailed notes and conduct their own investigation into the health of the person during the interview.
Your estate planning should always be current and reflect your current circumstances, but should also deal with the what-if scenarios you may face in the future. If cognitive decline is possible, you should immediately plan what to do when you have lost mental capacity.
Power of Attorney
A Durable Power of Attorney is a document that allows you to set someone in charge of financial decisions on your behalf when you are no longer able to make them yourself. You can choose to have your power of attorney come into play immediately, or only be activated when the doctor deems it is necessary. Having a power of attorney can be very helpful, as when you are in hospital, your attorney can continue paying your bills on your behalf and manage your financial obligations. If you don’t name a power of attorney, and you lose mental capacity, your family faces a much tougher time. Your family will have to go to court and produce evidence as to why you cannot handle your assets and finances. This process can be draining and time-consuming.
Another form of a power of attorney, called an Advanced Health Directive, can make decisions for you in regards to health care and other areas. When you are unable to make those decisions, your nominated person can make them for you. They will have access to your health history and health care. You are able to state basic end of life care, what medical treatments you consent to, and when you’d like medical treatment to stop. For example, you can say that after you reach a certain age you do not want to be revived if you die, or what surgery you wish to avoid.
A power of attorney should be someone trustworthy, as when you are no longer able to make decisions, they must make them for you. Even if you are confident that you will never be in a situation to need a power of attorney, you should have one nominated. Your life may take a drastic, unexpected turn.
Wills and Trusts
It is always a good idea to have a will. In your will, you can list what you wish to happen to all of your assets. You can name an executor who will ensure your will is carried out correctly. While it is not necessary to have a lawyer assist you in creating a will, it is recommended to ensure you have followed all correct legal procedure and haven’t made a mistake. Succession law, or the law that deals with wills and estates, is a complex area of the law and it’s easy to make mistakes that can have significant consequences for those you leave behind,
It is also important that you consider what you want to do with your super and assets owned by other entities, such as business assets. In these circumstances, it’s common to have a more complex estate planning structure to take care of how you’d like these assets to be dealt with.