Q Dear Rick:
I am a divorced woman in my early 70s. After my divorce, a friend and I decided in order to save expenses that we would live together. We ended up buying a condominium that’s in both our names. We share expenses and we keep our finances totally separate. Recently, my friend was diagnosed with early stages of dementia. She has asked me and I have agreed to handle her affairs when she is unable to do so. She also wants me to inherit her assets upon her death. She receives a pension and Social Security which covers her living expenses. The money is directly deposited into her checking account which I have been added onto. Her other major asset is her IRA which she has named me as beneficiary. My question, is there anything else that I need to do? I should mention that my friend is divorced and is estranged from her children.
A Dear Evelyn:
My best to your friend as she enters this new and challenging phase of her life. She is lucky that she has a friend like you who will help her.
In reviewing the situation I do believe that there are some things you should do. The first thing that I would recommend is that you obtain a General Durable Power of Attorney and a Medical Durable Power of Attorney. These two documents will allow you to handle her affairs from a legal and financial standpoint. The General Durable Power of Attorney will allow you to handle her legal and financial matters, while the Medical Durable Power of Attorney will allow you to handle her affairs from a medical standpoint. These two documents are essential to allowing you to easily handle her affairs without judges, courts and lawyers getting involved. After all, one of the issues you have to be aware of is that even though she may be estranged from her children, it doesn’t mean the children won’t try to get involved. After all, you and I both know that when there’s money on the table even estranged relatives seem to come out of the woodwork. By having the requisite powers of attorney, it gives you legal standing to handle your friend’s affairs.
With regard to the Medical Durable and the General Durable, I strongly recommend that you sit down with an attorney and have those documents drafted. Particularly in this situation where someone down the road can question whether your friend was legally competent to execute these documents, having an attorney involved in the process will certainly assist you. In addition, one thing that you may wish to put into the powers of attorney is the fact that she is estranged from her children and that she does not want them involved at all.
Because she wants you to be the beneficiary of everything, I would also recommend that when you visit the attorney you also have him redo your friend’s will where she specifically disinherits her children. Although it appears that the assets she has would avoid probate upon her death, I believe it is important to have a will to cover your backside. By disinheriting the children, you reduce the chances dramatically of them trying to cause problems upon her death. By having a will that disinherits them, it gives you the most amount of protection.
Alzheimer and dementia are horrible illnesses and unfortunately, as the population ages, more and more people are contracting this horrible disease. Although there’s nothing that I can tell you that would prevent the disease, there are things that you can do to make life easier for you and your loved ones. In addition to preparing powers of attorney and making sure that your will or trust is up to date, it is also important to check all beneficiary designations and also do a document locator. A document locator is nothing more than a list of all your assets and important documents and where they are kept. The bottom line, there’s nothing that we can do to prevent Alzheimer, dementia and other types of illness. However, there are things that we can do from a legal and a financial standpoint that will make life easier. The key is to be proactive and to make sure these documents are in place so that in cases of a family tragedy, you and your family are protected.