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How to put your money matters in order if dementia strikes

Early this week (November 24, 2020)an article by the same name was published in “The Economic Times” by a team of three advocates - Shaishavi Kadakia, Debkanya Naskar and Sanjana M. The article is so relevant and detailed that we could not help but share it with you. We at Porosh are sure you will find it extremely helpful if you have senior citizens staying alone at home and seem to be showing early signs of dementia.

A dementia diagnosis can be overwhelming. Apart from medical and emotional distress, it can cause financial and legal complications. Planning in advance, however, can help obviate some of the complications and enable a life of dignity.

Dementia is caused by neurodegenerative disorders affecting the elderly such as Alzheimer’s disease or Parkinson’s disease. It causes a progressive loss of memory and cognitive function which, over time, diminishes ‘legal capacity’ to undertake any financial and legal actions. If there is an early diagnosis, it is vital to plan one’s financial and legal affairs during the crucial period from onset to the possible cognitive impairment stage.

Create a financial plan

As the first step, create a robust financial plan for future medical, caretaker and living expenses. If assets are required to be liquidated, do so. Selling assets can be difficult once legal capacity is lost. A joint bank account should be opened with a trusted person, bearing instructions that it may be operated by either or survivor. The RBI allows procedural relaxation for banking operations for the elderly and disabled.

Set up a trust

Explore the option of creating a trust with your legal advisers. A trust is a legal device in which one person (trustee) manages assets for the benefit of another (beneficiary). If you are the beneficiary, your expenses will be met through the income and assets of the trust, without the need for your participation. This is useful to cover your income needs when you are unable to manage the assets yourself. Plan in advance as creating a trust requires time and thought. Choose trustees wisely. Trusteeship service are offered by banks/financial institutions as well for a fee. Review medical insurance

Review the terms of your health insurance policy to confirm the adequacy of the coverage. Legally, insurance for treatment of mental illness must be made available on the same basis as physical illness. Unfortunately, if your existing policy does not cover the treatment, it may be difficult to obtain a new policy since pre-existing conditions are typically excluded from the ambit of coverage of new policies. The essential checklist

1) Open an ‘either or survivor’ joint bank account with a trusted person

2) Calculate future cost of living and medical expenses

3) Ensure liquidity in the bank account to meet future expenses

4) Consult legal advisers on creating a trust

5) Review health insurance policy to confirm that your illness is covered

6) Prepare a Will and register it

7) Discuss your preferred treatment wishes with your family

8) Do not rely on powers of attorney for financial and legal matters; make adequate alternative arrangements

9) Discuss with your family who should be appointed your legal guardian

10) Empower your family legally and emotionally to take decisions on your behalf

Draw up a will

Legally, only a person of ‘sound mind’ can make a Will. Therefore, it is advisable to draw up a Will before cognitive functions are diminished. To prove ‘sound mind’, buttress the Will with supporting evidence such as:

1) Certificate of ‘sound mind’ from an attending doctor post a psychological examination;

2) Video-recording of the entire process of Will execution; and

3) Registration of the Will.

Give advance directives

If you have preferred treatment wishes, then discuss them with immediate family/caregivers upfront or hand over a statement of wishes. The Mental Healthcare Act, 2017 recognises issuance of an Advance Directive (AD) for recording such but the procedure for making ADs under the MHA is not yet operational. Till then, the best options remain discussions with family members/caregivers or a statement of wishes.

The above actions will not be possible once dementia progresses to a more advanced stage resulting in legal incapacity. At this stage, the individual will have to be supported by a guardian and by maintenance from family members. Appoint a legal guardian

A relative/caregiver cannot unilaterally deal with the property/bank accounts of an incapacitated person. A power of attorney (PoA) will also not be helpful because a PoA holder cannot act for the donor when the donor can no longer act for himself. In order to deal with such assets, therefore, the relative/caregiver will first need to be appointed a legal guardian. There are various legal options for appointment of a guardian, and it is advisable to examine which will be suitable, depending on the facts of each individual’s case.

Seeking maintenance

Elderly patients who are unable to maintain themselves can seek maintenance under the Maintenance and Welfare of Parents and Senior Citizens Act, 2007 from their adult children or, if they are childless, any legal heir who is in possession of or would inherit their property after their death. Maintenance may also be sought from adult children under the order of a judicial magistrate.

Lastly, if you have been diagnosed with dementia, discuss your financial and legal affairs with your family and caregivers. Ensure that they know what your assets are and where they are situated. Empower them legally and emotionally to take decisions on your behalf, so that irrespective of the situation, your wellbeing and dignity remain paramount.

For Dementia Counselling, Call us at : +91 7439852047


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