A dementia diagnosis is a medical and emotional blow, but it is also the beginning of a long list of legal and financial decisions few families feel ready to make. In the first weeks, families are absorbing hard news, learning an unfamiliar vocabulary of stages and symptoms, and trying to picture a future that has just changed shape. The paperwork tends to feel like a problem for later because understandably, the instinct is to focus on doctors and treatment first.
But conditions that cause dementia are unlike many other diagnoses in one crucial respect: dementia slowly erodes the decision-making ability that the law requires to put a plan in place. Nearly every protective step a family might take rests on the person being able to understand and authorize it themselves. That ability — known as legal capacity — doesn’t vanish overnight, but it does fade, sometimes faster than families expect. When families wait too long the decisions don’t disappear; they simply move from the kitchen table to a courtroom, at far greater cost and strain.
That makes the period right after a diagnosis one of the most consequential moments for a family to act. What needs to be done, and in what order? And how do you protect someone you love without stripping away their dignity in the process?
To answer those questions, we sat down with Sara E. Meyers, partner in the firm Enea, Scanlan and Sirignano, LLP. Meyers concentrates her practice on elder law, guardianships and long-term care planning strategies, and she has spent three decades guiding families through exactly these issues. She practices in New York, and while the specific rules vary from state to state, the principles she lays out apply in other jurisdictions. In the conversation that follows, she walks through what to prioritize first, why a handful of documents matter so much, how families should plan for long-term care, and how to keep a vulnerable person safe from those who would take advantage.
Usually it’s panic and confusion. People really don’t know what to do — and there’s so much to address medically, financially, and legally to get that person’s affairs in order. A big part of working with an elder law attorney is making sure the attorney listens. It’s critical that the person who’s been diagnosed feels heard and has agency. So before you hit someone with all the legal things they “should” be doing, you have to develop a rapport.
One of the signs of early-stage dementia is paranoia—you can’t find your keys or your wallet, and you start to feel like someone is trying to take these things away from you. So when I explain the legal documents, I frame them as a way of taking control, not losing it. You get to designate who handles your medical decisions if you can’t, through a healthcare proxy, and who handles your finances, through a power of attorney. You’ve been diagnosed with something that unfortunately doesn’t get better, so the question becomes: what can you control? And it’s so important to do this before the dementia reaches a point where you no longer have the capacity to understand and sign.
There’s a famous Supreme Court line about pornography: “I know it when I see it.” Capacity is a little like that. Legal capacity is different from medical competency, and the legal side is somewhat subjective. At one end you have someone with early-stage dementia who’s losing their keys but still knows that they bank at Chase and worked at IBM for fifty years. At the other end, you may have someone who isn’t oriented to person, place, or time — faces are familiar, but they couldn’t tell you whether you’re their son or their brother. The real question is about the gray middle, and that’s hard to define.
In New York we don’t use the diagnosis to draw the line; we look at functional limitations. Are you aware of your assets? Can you handle your own medical and financial affairs? No two dementias are the same — so two people can both be “stage two” and function very differently. That’s why you build rapport first. Some people with dementia have a script and can sound wonderful for the first ten minutes, but then loop back to the same script. You have to tease that out through conversation. If you rush in and say, “I’m Sara, let’s sign,” you haven’t talked long enough to know whether the person has capacity or is just in that scripted loop.
In New York, the option is guardianship—some states call it conservatorship. You petition the court to have a family member appointed guardian of the individual’s “person and property,” because they can no longer make medical and financial decisions for themselves. There’s a hearing where the petitioners testify about the person’s functional limitations and who should serve as guardian.
What I tell clients is this: simple planning in advance costs a fraction of what a guardianship does. A court proceeding can run $10,000 to $20,000, all because someone didn’t sign, or refused to sign, advance directives. There’s still so much stigma around this.
The power of attorney and the healthcare proxy are the two most important. People ask me, “What’s the most important document — the will?” No. If you die without a will, there’s a statute that dictates where your assets go. But if you become incapacitated during your lifetime without a power of attorney and a healthcare proxy, your family ends up in a court proceeding just to take control.
It’s helpful to keep the documents broad, the power of attorney especially. New York’s form has the statutory powers plus a section for modifications, and that’s where the gifting powers go. You want a broad power of attorney with broad gifting authority so that, down the road, an agent can move or gift assets to do Medicaid planning, or to address an estate tax issue. You want your agent to preserve the flexibility to handle any of those scenarios.
I’d also recommend a living will. In New York a living will isn’t legally binding on its own, but it gives direction to your healthcare proxy as evidence of your end-of-life wishes.
Essentially it says that if you’re in a vegetative or comatose state with no chance of recovery, you don’t want artificial respiration, CPR, or tube feeding, and you want maximum pain relief. It means your healthcare proxy isn’t really making the decision— you’ve already made it, and they’re just carrying out your wishes. As a parent you want to protect your children, and this protects them from having to make these decisions for you.
A living will also helps in another situation: if someone is home on hospice, goes into cardiac arrest, and 911 is called, the living will helps ensure they won’t be transported to the hospital. This provides real peace of mind for a family that has chosen to let their loved one die at home.
Because care is staggeringly expensive. In the lower part of New York State, a nursing home can run $20,000 to $25,000 a month, and around-the-clock home care $15,000 to $20,000. Even substantial savings disappear fast — $1 million at $200,000 or $300,000 a year runs out incredibly quickly. So we look to Medicaid, but you have to plan for it because the program for nursing home Medicaid has what’s called a “look-back period” for your financial assets.
Nursing home Medicaid falls under federal law, with a five-year look-back. When you apply, you provide five years of financial records — yours and your spouse’s — and document every transaction over a threshold, usually $2,000. Uncompensated transfers that aren’t exempt get penalized –- this is when you have given money away or sold something for less than its fair market value. But some transfers are exempt: to a spouse, for example, or to a disabled child or a supplemental needs trust for that child.
If you need Medicaid for nursing home care, you can transfer everything to your spouse — that’s an exempt transfer. This is exactly why that broad power of attorney with gifting powers matters so much. If the person later needs nursing home Medicaid, we can implement a “crisis plan” to preserve some of the assets. Without that document, those avenues are largely closed.
New York has the most robust Medicaid home care program of any state, though with the tight state budget many clients are being offered fewer hours of care right now.
Here’s something many people don’t realize: in New York, there’s no transfer penalty for home care the way there is for nursing home care. So if I need home care, I — or my agent under a power of attorney that allows gifting — can transfer assets, and as long as I’m below the Medicaid asset limit, around $33,000 in non-retirement money, I can qualify.
Albany passed a two-and-a-half-year look-back for home care in the March 2020 budget, but COVID stalled it, and it still hasn’t taken effect. For now, there’s no transfer penalty on home care.
They are. Families often arrive after unintentionally making the situation worse — “Don’t worry, we already moved all of Dad’s money into our names.” But Dad’s in a nursing home now, and that move wasn’t helpful. In a crisis, we can typically protect only forty to fifty percent of the assets.
Nursing homes also often won’t tell residents to consult counsel because the private-pay rate is significantly higher than the Medicaid rate. It’s a sin of omission — they just don’t mention that an option exists.
Unfortunately, yes, but it’s penny wise, pound foolish. People come in saying, “We found forms online six months ago, and now Dad doesn’t have capacity and the forms are no good.” Maybe they weren’t state-specific, they didn’t include gifting powers, or the named agents acted as the witnesses. You get what you pay for, especially in crisis mode.
The Medicaid rules are complex and ever-changing. There’s a certification called CELA—Certified Elder Law Attorney; there aren’t even forty of us in New York State. You want someone who truly knows this area of law.
It’s often family. The classic case is: “I moved in to take care of Mom, but we inherit equally when she dies — that’s not fair, so I’ll start helping myself.”
Financial abuse often goes hand in hand with isolation: badmouthing the sibling, refusing to put calls through, telling visitors at the door that “Mom doesn’t want to see you.” Then there are neighbors who “help” by taking Mom to the bank and skimming cash. And the online scams — romance and investment schemes — where someone vulnerable clicks once and keeps paying. Once that money’s gone, it’s very hard to recover.
With isolation, the signs are concrete: Mom’s cell is suddenly disconnected. You go to the house and no one answers. That’s when you call Adult Protective Services. With scams, the person often becomes secretive and starts hiding things.
The moment of diagnosis is the time to get organized: locate all the assets and determine who has access, consolidate old accounts, change passwords, turn on two-factor authentication, and set up bank alerts. Also make sure the bills continue to get paid, especially the long-term care premiums, so the policy doesn’t lapse right when you finally need it.
The best protection is having a trusted person who can access the accounts and a financial advisor who’s paying attention. If $5,000 a month has come out for years and suddenly I’m asking for $150,000, that advisor should freeze the account and find out what’s going on.
Dad says, “I don’t want to sign,” and they do nothing. There’s no follow-through. People also have inertia—”If I don’t admit I have a diagnosis, then I don’t have it.”
Families are also more spread out now and may not even realize what’s happening. I once handled a case where Mom had significant dementia and Dad was quietly covering for her. She was fine for a half-hour visit. Then Dad had a stroke, and only then did the children realize their mother had dementia. We ended up bringing guardianships for both parents.
Having those conversations, and de-stigmatizing the diagnosis, would go such a long way.
It’s wonderful. A couple comes in and both do their planning — powers of attorney, healthcare proxies, wills, and maybe a Medicaid asset protection trust to start shielding assets against the cost of long-term care. Everything is organized, so when care is suddenly needed, it’s all in place.
Compare that to the more common scenario: Dad has had dementia for years and nothing was done, the house is jointly held with no power of attorney so we can’t retitle it, and now we’re running three legal matters at once.
The difference is night and day. When it’s done right, everybody knows what’s going on and the individual’s goals and wishes can be honored.
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