Alzheimer's Disease Education and Referral Center

Legal and financial planning for the AD patient: How the health care team can help

June 1, 2007
African-American couple with papers

A diagnosis of Alzheimer's disease (AD) all too often finds the patient and caregiver unprepared to deal with the important legal and financial decisions that eventually will need to be addressed. Indeed, many people have not taken time to plan ahead to communicate their wishes clearly if a major neurodegenerative disease strikes, according to recent national surveys. Even if a person has taken some of the necessary steps to create planning documents, chances are these plans need to be thoroughly reviewed and updated in light of a diagnosis of dementia.

Over time, cognitive decline strips AD patients of the ability to think clearly and make major decisions. Ideally, major legal and financial decisions should be made before judgment and emotion are clouded, when the person with AD can think clearly and can still make decisions. Of course, no one plans to get AD. It is usually not until after a diagnosis of AD that most patients and families address legal and financial issues, such as making a will, creating a living trust, and adopting advance directives.

The news of a diagnosis can prompt many strong emotions in patients and families. The health care team can use its unique position of trust and influence to find the right emotional context to convey the importance of basic legal and financial planning. To introduce concepts of advance legal and financial planning early on, professionals must use their training and experience to identify a time when patient and caregiver can begin to absorb this vital information. Treatment plans can include discussions that go beyond the medical and behavioral symptoms of the disease. The health professional team also may need to initiate these discussions a number of times before family members are able to process and act upon the information.

Start Discussions Early

Older man at computer

Because the rate of cognitive decline is unpredictable and can differ for each patient, experts agree that health care professionals should advise patients and families about their legal and financial options as soon after initial diagnosis as possible. Advance planning with early-stage AD patients can often involve the patient, caregiver, and family members in the decision-making process. The early-stage AD patient is still often mentally capable of understanding many aspects and consequences of difficult issues. But this is often also a time when certain defense mechanisms, such as denial, may be strongest.

"The days and weeks after an AD diagnosis are a time when patients and caregivers are coming to grips with a number of issues of immediate and high priority. It is also a time of emotional stress. We can use our experience and professional judgment to gauge when it's right to introduce the concept of advance planning for newly diagnosed AD patients and their caregivers. We cannot act as their legal or financial advisors, but we can encourage patients and families to make well-informed decisions about future health care choices, financial arrangements, and end-of-life care while the AD patient is able to participate in the decisions," commented David Knopman, M.D., Department of Neurology at the Mayo Clinic's Alzheimer's Disease Center.

These discussions can provide a plan, address potentially troubling situations, and reduce stress and daily emotional pressures. Some experts say that involving the person with AD and the family in advance planning gives them a way to feel more in control and take care of "unfinished business." That said, however, it is necessary to make sure the recently diagnosed person is emotionally stable and has grasped the significance of the diagnosis before legal and financial discussions can begin.

"The newly diagnosed patient with AD may sometimes lack the ability to make decisions. Not all patients are at the very mild stage when they are diagnosed. While we want to encourage as full participation in planning as possible, it is also important to realize that some patient decisions may already be problematic from a capacity standpoint," says Daniel Marson, J.D., Ph.D., Professor of Neurology, and Director, Alzheimer's Disease Research Center, University of Alabama at Birmingham. "Nonetheless, the patient's participation and, where appropriate, assent should be solicited even if legally he/she is no longer the decision maker in a particular matter." Dr. Marson also recommends that, where possible, advance planning actually begin prior to dementia diagnosis—at the mild cognitive impairment (MCI) stage or even before. Dr. Marson notes that most MCI patients "will likely retain decisional autonomy in most areas and will have only modest cognitive impairments interfering with their participation in planning."

Many planning decisions are integrally related to whether or not the patient remains legally capable (has "capacity") of making particular kinds of decisions. It is the legal profession and in particular judges who ultimately make these legal determinations. However, clinicians with expertise in both AD and capacity can carry out clinical evaluations of capacity in these patients, and provide guidance to patients, families, the care team, and attorneys and judges. For more information on legal capacity, see the American Bar Association listing at the end of this article.

Who Can Help?

African-American couple

Attorneys—There are many good reasons to retain the services of a lawyer when preparing advance planning documents. For example, a lawyer can help interpret different State laws and suggest ways to ensure that the patient's and family's wishes are carried out. It's important to understand that laws vary by State, and that changes in situation, for instance, a divorce, relocation, or death in the family, can influence how documents are prepared and subsequently maintained. Experts urge families to remember that changes in circumstances as well as State laws may require periodic document up-dates, and it's good practice to review these documents every few years anyway.

"Once a person has been diagnosed with AD, we recommend that the person and his or her family seek the advice of an elder law attorney—a lawyer qualified to handle the special legal needs of older people—to devise plans. For instance, an attorney can help people understand what Medicare will and will not cover, how to cover expenses like long-term care, and the differences between skilled and custodial care. An elder law attorney can also provide advice to help the well spouse avoid becoming impoverished while trying to care for an ill loved one," commented Ronald Fatoullah, a New York attorney with the National Academy of Elder Law Attorneys. The Academy and the American Bar Association can help families find a qualified lawyer. See the Resources section at the end of this article for contact information.

Geriatric Care Managers—Geriatric care managers can be another resource in dementia care. These professionals usually are trained as social workers and/or are licensed nurses. They can help the person with AD and the family discuss sensitive or difficult topics. Geriatric care managers also can help families:

  • evaluate in-home care facilities and logistics
  • select and evaluate in-home care personnel
  • make referrals and coordinate medical services.

In addition, they can serve as a liaison between the person with AD and his/her caregivers, and other family members. They are trained to work with complex family situations and relationships and can help discuss emotional concerns, such as loss or grief. Geriatric care managers can also facilitate family discussions about short-term and long-range planning, living arrangements, and relieving caregiver stress. For more information on geriatric care managers, see the Resources section at the end of this article.

Legal, Financial, and Health Care Planning Documents

When families begin the legal planning process, there are a number of strategies and legal documents they will need to discuss. Depending on the family situation and the applicable State laws, some or all of the following terms and documents may be introduced by the lawyer hired to assist in this process. Broadly speaking, these documents can be divided into two groups:

  • documents that communicate the health care wishes of someone who may no longer be able to make health care decisions, and
  • documents that communicate the financial management and estate plan wishes of someone who may no longer be able to make such financial decisions.

Health Care Planning

Two doctors and a man

Advance directives for health care communicate the health care wishes of a person who can no longer make health care decisions. These documents must be prepared when the individual still has legal capacity to execute them. Advance directives for health care include Living Wills, the Durable Power of Attorney for Health Care (sometimes referred to as a Health Care Proxy), and Do Not Resuscitate orders.

A Living Will is a record of a person's wishes regarding specific medical circumstances and treatment at or near the end of life. It can specify future decisions about life-sustaining treatment and major health care decisions when the patient becomes terminally ill or permanently unconscious.

"The Living Will creates the legal framework for a terminal patient to die with dignity and protects the physician or hospital from liability for withdrawing or limiting life support," says Jason Karlawish, M.D., of the University of Pennsylvania Alzheimer's Disease Center. "Perhaps one of the most important things a person can indicate in a living will is how much leeway or discretion is given to the trust proxy over decisions. Most people would like their trust proxy to exercise some discretion over decisions. The key then is thinking about what kinds of values and considerations should guide that discretion."

A Durable Power of Attorney for Health Care is a document in which an individual designates an agent, or proxy, to make future medical and other health care decisions, when the individual is no longer capable of doing so. While most regular powers of attorney become invalid upon the mental incapacity of the executor, this  document in contrast, because of its "durability," continues in effect. A Durable Power of Attorney for Health Care can be highly detailed in its instructions and can carefully limit the scope of action of the agent. Some of these go into effect immediately upon execution, while others, called "springing," only go into effect upon the occurrence of a future defined event (often formal clinician determination of incapacity of the individual).

Depending on how the Durable Power of Attorney for Health Care is drafted, the agent can have the "final say" regarding everything from minor health concerns to major medical decisions. For example, agents can be given authority to:

  • discharge health care providers
  • remove the patient from an institution
  • choose to refuse or agree to various treatments
  • have access to medical records
  • make decisions about making anatomical gifts.

The agent should be someone who understands the needs of the patient. Ideally, the agent is a person who can be flexible and stay calm under pressure and the ever-changing dynamics of illness. Depending on what the patient specifies and the legal requirements of the State in which the patient lives, the agent can decide whether the person with AD will end life at home or in a professional facility.

Agents also can be legally empowered to make decisions about starting, continuing, or discontinuing life support if the patient has not specified such wishes in a living will. Life support for an AD patient often involves the question of whether to use a feeding tube. "We generally don't recommend enteral nutrition and hydration at the end of life. It can be uncomfortable for the patient, and there is little if any evidence that it effectively treats common problems such as aspiration, skin breakdown, and infections," said Dr. Karlawish.

Choosing an alternate health care agent is a good idea, in case the primary agent is unavailable. In this connection, the Health Information Portability and Accountability Act (HIPAA) of 1996 sets rules and limits about who can access private medical information. Each person must state in writing who is allowed to view and obtain medical records in the event that he or she is no longer capable. Without written permission, the agent, alternate agent, family members, or other health professionals will have difficulty obtaining records needed to make informed health care decisions.

The Do Not Resuscitate orderis a document that instructs health care staff, including emergency medical technicians, not to perform life-saving treatments or other heroic measures (for instance, cardiopulmonary resuscitation) in medical situations where they could be used.

Financial Management and Estate Planning

Couple looking at document

Planning documents for financial management communicate the financial and estate plan wishes of a person who may be unable to make such decisions. Financial management documents include the Durable Power of Attorney for Finances, Wills, and Living Trusts. Each of these documents must also be prepared and executed when the individual still has legal capacity.

A Durable Power of Attorney for Finances is a document in which an individual designates an agent, or proxy, to make financial decisions on his/her behalf—again often at a time in the future when the individual is no longer capable of making such decisions. It is durable and is explicitly intended to survive the incapacity of the individual. This document should be carefully drafted to give the agent the necessary powers to carry out the financial affairs of the individual. The Durable Power of Attorney for Finances can provide patients and families a great deal of flexibility in managing financial matters, and in the right circumstances, it can help them avoid the need for court conservatorship and judicial oversight of financial affairs. They can go into effect upon execution or be springing.

A Will is the most familiar financial planning document. It indicates how a person's assets and estate will be distributed among beneficiaries (heirs) after his/her death. Instructions found in a Will include naming how dependent minors are to be cared for, spelling out specific gifts, creating trusts to manage the estate, and providing funeral or burial instructions. An individual must have "testamentary capacity" (the legal ability to make a Will) in order to create a valid Will. Although testamentary capacity is generally viewed in a liberal way by the courts, it is important that the newly diagnosed patient with AD and his/her family move quickly to make or update a Will and secure his/her estate.

A third financial planning document is the Living Trust. In a Living Trust, a "grantor" creates a Trust and designates a person to serve as trustee and follow the Trust's terms after the grantor dies. The trustee manages assets for a beneficiary (often the grantor) and has a legally enforceable fiduciary duty towards the beneficiary. The Trust is called "Living" because it is created while the grantor is living and not at his/her death. While alive, the grantor usually may serve as a trustee and control the assets even though they belong to the Trust.

The main advantages of a Living Trust are that it can encompass a wide range of property, provide a detailed plan for its disposition after the grantor's death, and avoid the expense and delay of probate for wills. A Living Trust can also state where property should be distributed when the last beneficiary dies or whether the trust continues to exist for the benefit of others. The trustee can also be named as the health care agent through a Durable Power of Attorney for Health Care. Experts advise that extra care should be taken to ensure that the transfer of assets after death will take place, rather than being left in an account after the death of the person creating the trust. They also recommend naming an alternate trustee.

Revisit Plans Over Time

The AD patient and caregivers may need time to consider and sort through the health care team's planning advice. "Because there are so many challenges facing the patient and family, we need to recognize that one conversation about advance planning may not be enough. We should revisit the issue from time to time with the family and with the patient, if feasible, and reiterate to them that advance plans can and should evolve as situations change, all the while realizing that the patient's ability to participate meaningfully in such meetings will decline over time," commented Dr. Knopman.

Advance Planning Regarding Funeral Arrangements

The family of a person with AD also may want to consider advance planning for the funeral. As difficult as these topics may be for everyone—including the health care professional—to discuss, and although it may be several years until end-stage AD, experts say that advance planning for death can provide a sense of peace and help reduce anxiety or a sense of urgency.

Resources for Low-Income Families

Low-income families who cannot afford the services of a private lawyer can still do some advance planning, particularly in the area of health documents. The basic health planning documents, though they may vary from State to State, use terminology and instructions that are fairly consistent. Document templates can often be downloaded from State government Web sites, and legal advice or help may be available from local Area Agency on Aging officials. Other sources of legal assistance for low income families include State legal aid bureaus, the State Bar Association, local nonprofit agencies, foundations, or social service agencies that provide umbrella services and may be able to provide referrals to organizations that offer reduced- fee or free services.

Ethical Wills

An increasingly popular, but not legally binding, document is the Ethical Will. Ethical Wills are written statements by people who are dying. The Ethical Will imparts end-of-life wisdom about what the person has gleaned from life. The Ethical Will often completes "unfinished business" and ties up loose ends. These documents thus serve as a testament to the person's philosophy of life. To an early-stage AD patient, an Ethical Will provides the opportunity to reflect on life, share values, restate principles, convey hopes, impart lessons learned, and provide details on family culture and background.


Facing AD is difficult and can be emotionally wrenching for all concerned. At some point soon after the diagnosis, the health care team can help the patient and family begin thinking about and addressing many end-of-life issues. Facilitating health care and financial planning can help families confront tough questions about future treatment, caregiving, and legal arrangements, and can help increase patient and family empowerment and closure.


The ADEAR Center offers So Far Away: Twenty Questions for Long-Distance Caregivers, which discusses legal and financial concerns and outlines many of the issues facing families when a patient lives far away. Also available is the Age Page: Getting Your Affairs in Order, which summarizes the steps older people can take to prepare for legal and financial planning in later life.

Additional resources:

Legal Counsel for the Elderly
601 E Street, NW
Washington, DC 20049
1-888-OUR-AARP (1-888-687-2277)

Aging Life Care Association
3275 W. Ina Road, Suite 130
Tucson, AZ 85741-2198
(520) 881-8008

Aging with Dignity
5 Wishes
1-888-5WISHES (1-888-594-7437)

Alzheimer's Association
225 North Michigan Avenue, Fl. 17
Chicago, IL 60601-7633

American Bar Association
Commission on Law and Aging
740 15th Street, NW
Washington, DC 20005-1019
Phone: 202-662-1000

The American Bar Association and the American Psychological Association have co-written a handbook entitled Assessment of Older Adults with Diminished Capacity: A Handbook for Attorneys. This handbook is designed to help lawyers become familiar with clinical indicators and appropriate assessment tests and resources for assessing diminished legal capacity in older clients. It is available online at

Eldercare Locator
Phone: 1-800-677-1116

Family Caregiver Alliance
180 Montgomery Street, Suite 1100
San Francisco, CA 94104
Phone: 1-800-445-8106

National Library of Medicine
Search for:
"Advance Directives"
"End-of-Life Issues"

National Academy of Elder Law Attorneys
1604 North Country Club Road
Tucson, Arizona 85716
Phone: 520-881-4005


Legal & Financial Planning Documents
Type of document How It is Used
Medical Document
Durable Power of Attorney for Health Care Gives a designated person the authority to make health care decisions on behalf of the patient.
Living Will Describes and instructs health care staff how the patient wants end-of-life health care managed.
Do Not Resuscitate Form Instructs health care staff not to perform specified life-saving or other heroic measures.
Legal/Financial Document
Will Indicates how a person's assets and estate will be distributed among beneficiaries after his/her death.
Durable Power of Attorney for Finances Gives a designated person the authority to make legal/financial decisions on behalf of the patient.
Living Trust Describes how the patient wants to allocate funds and settlements.


Page last updated: September 19, 2016