Caring for an elderly parent is a difficult and emotionally fraught task. Outside of the day-to-day care, questions arise about ensuring their well-being in the future and the appropriate handling of their assets after they pass away.
One of the most common concerns is how to manage a parent’s home, especially if one sibling has taken on a primary caretaking role. The estate planning attorneys at Clear Counsel Law Group often address these concerns by focusing on the aspect of legal capacity and how that informs estate planning.
Legal Capacity in Estate Planning
Legal capacity refers to an individual’s ability to make decisions for themselves and understand the consequences of those decisions. It’s not about whether someone can solve complex problems as they could in their younger years, but whether they can comprehend the implications of decisions about their property and care. This understanding is vital when planning for the future of an elderly parent’s assets.
Bequeathing a home is a touchy subject under the law. While it is important for many elderly parents to stay in their home, it isn’t always financially viable. Moving them out risks rapid decline but so does running out of funds to afford care. The watchword when dealing with a home, or other assets, is undue influence. Is the elder capable of understanding their decisions and are they making them freely or under duress by the caretaker?
How is Capacity Assessed?
Capacity is assessed in two different ways. The first is often a medical determination, requiring consultation with a physician. Principle in this assessment is looking for cognitive health and looking for terminal or degenerative conditions. The second is psychological, do they care about their future and understand the implications of decision making?
If a parent is still sharp and can make decisions with a clear understanding of their implications, there are many options for proactive estate planning.
Options for Parents with Capacity
For parents who retain their capacity, several avenues can ensure they stay in their home and designate who will inherit the property after their passing. Some of these options include:
- Reverse Mortgage: This allows the parent to stay in the home while accessing the equity they have built up.
- Simple Will: A straightforward way to designate who will inherit the property.
- Revocable Living Trust: Offers more control and flexibility over how the property is managed and distributed.
When a Parent Loses Capacity
If a parent has lost their capacity, the options become more limited:
- Guardianship: In cases where the parent cannot make decisions, obtaining a guardianship order from the court may be necessary. This legal process allows a guardian to make decisions on behalf of the parent, including managing and selling property. Obtaining guardianship is a costly process both financially and in terms of time.
- Power of Attorney Documents: If valid documents exist, they can dictate who has the authority to make decisions, avoiding the need for guardianship. One of the steps in establishing power of attorney is gauging undue influence. Though things can change between the time power of attorney is executed and incapacity occurs, generally it is expected that the agent is acting in the elder’s best interest.
Can Capacity be Regained?
Absolutely. Loss of capacity is not always permanent. There are instances where capacity can be regained after medical treatment or recovery from an illness. In such cases, guardianship can be used as a temporary solution until the individual regains the ability to make decisions. A healthcare power of attorney is also useful for taking care of their treatment options with the goal of restoring capacity.
Why Consult with Clear Counsel Law Group?
Caring for an elderly parent and managing their estate requires careful consideration of their legal capacity and the most appropriate estate planning tools. If you’re in a situation where you’re caring for an elderly parent and unsure how to manage their assets or estate planning, consulting with legal professionals can make all the difference. Whether it’s evaluating your parent’s capacity, discussing estate planning options, or considering guardianship, our team is equipped to provide the guidance and support you need.