By Monte L. Schatz of  Vandenack Weaver LLC

When the topic of estate planning comes to mind, most individuals think about the distribution of their assets at death.  The increased longevity of our population requires equal attention to diminished cognitive skills caused by dementia or other diseases that affect normal cognitive functioning.

Dementia is a syndrome in which there is deterioration in memory, thinking, behavior and the ability to perform everyday activities.1  An estimated 5.5 million Americans of all ages have Alzheimer’s disease.  One in ten people age 65 and older has Alzheimer’s dementia.2  The average survival time for people diagnosed with dementia is about four-and-a-half years, new research shows.  Those diagnosed before age 70 typically live for a decade or longer.3  The time frame from mild cognitive decline to the onset of dementia averages seven years.4  Typically, when an individual is in the moderately severe cognitive decline, assistance may be required for daily activities and management of the person’s financial affairs.

The difficulties that families encounter is determining when the person no longer can manage their own affairs or maintain his or her own physical well-being.  The ultimate question of capacity is a legal determination and, in some cases, a judicial determination, not a clinical finding.  A clinical assessment stands as strong evidence to which the lawyer must apply judgment considering all the factors in the case at hand.5  While psychologists and other health professionals may use different terms than lawyers, conceptually, the clinical model of capacity has striking similarities to the legal model.6

The best estate planning approach is to take proactive legal steps ahead of mental decline to assure adequate personal and financial care and to minimize unnecessary legal costs or litigation expenses.  The legal tools available to circumvent legal capacity issues include:

    • A will, drafted in advance of cognitive decline, to minimize heirs contesting an estate.
    • A living trust should be considered to assure proper management of assets and continuity of financial management by a trustee for the incapacitated person’s benefit.
    • A durable power of attorney for financial matters, designating a trusted and financially responsible individual to manage assets upon the onset of mental incapacity.
    • A health care power of attorney or directive that provides for a designated person to make health decisions in the event of incapacity.
    • A living will that outlines, in advance, the wishes of a person who receives artificial life sustaining treatment.

Thoughtful estate planning in advance of mental decline can help avoid expensive court alternatives that can include court conservatorships or guardianships during life and/or estate litigation after the person’s death.  More importantly, well-designed advanced planning minimizes the possibility of disputes among heirs that may disrupt family relationships.

About the Author: Monte L. Schatz is a partner with Vandenack Weaver LLC in Omaha, Nebraska.  He has 30 years of experience in the legal industry.  Monte has a wealth of experience in practice areas vital to business and finance.  His expertise includes trust administration, probate, estate planning, tax, securities, corporate and employer-employee relations law.  Monte’s wide scope of expertise also includes federal and state legal and regulatory compliance.  The best way to reach Monte is by calling (or texting) his mobile phone 402-504-1300 or emailing

[5] ABA Commission on L. & Aging & Am. Psychological Assn., Assessment of Older Adults with Diminished Capacity: A Handbook for Lawyers (2005), Executive Summary p. vii
[6] Id., p. v

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