As we age, our likelihood of mental incapacity increases.  After all, our bodies and minds deteriorate as we age.  Mental incapacity could result from dementia, stroke, brain injury, or other illness.  What is mental incapacity and in what ways can you plan to be best prepared for it? 

You are mentally incapacitated if you are unable to carry out your affairs.  Meaning, you can’t make meaningful decisions that are in your best interests regarding your finances or your property.  Now that doesn’t mean that if you make financial decisions that others don’t agree with that you are incapacitated.  Just because you decide to spend your money in an unusual way doesn’t mean that you can’t handle your affairs.  Instead, some questions to ask are:  Do you have a sound reason for this decision?  Do you understand the nature of and repercussions of this decision?  Is this decision detrimental to your financial health?  

If someone thinks you lack mental capacity, they may decide that the only way to protect you is to go to court and seek a guardianship order.  In preparation for the court proceeding, an evaluation will be done on you to determine if you are unable to make sound decisions in different areas, such as financial or healthcare decisions.  A hearing will be held, and evidence will be examined.  In the end, if you are found to be a person who needs guardianship, the judge will make a formal appoint of a guardian.  This guardian could be someone you trust (someone you would have chosen) or someone you don’t even know.   

If you haven’t been proactive and done planning, then a guardian could be necessary.  And, appointing this guardian timely could be needed to obtain Medicaid benefits.  In a recent case out of Indiana, Southwood Healthcare Center v. Indiana Family and Social Services Administration, a nursing home resident was incapacitated but did not have a guardian appointed.  The resident could not access their financial accounts due to their incapacity and so could not provide the necessary documentation to the Medicaid office in order to get their application for benefits approved.  The court ruled that the inability to access an account did not render the account an uncountable asset for Medicaid eligibility.  Because the resident had the legal right to the funds in the account, the account was still countable.  The resident would have to first go through the court process to get a guardian appointed, the guardian could access this account, and then another Medicaid application could be submitted.   

If the nursing home resident had instead planned for his incapacity before it happened, he could have been able to have a Medicaid application submitted on his behalf without going through the court process of getting a guardian appointed.   

We assist many clients with elder planning and guardianship. Contact our office to make an appointment.