Few situations are as heart-wrenching as witnessing the gradual development and suffering of a spouse affected by Alzheimer’s disease or another form of dementia. The progression of these conditions can vary, with some individuals displaying mild indications such as occasional memory lapses, while others experience severe confusion that hinders their ability to meet even their most basic needs. Amidst such circumstances, when the impaired spouse still retains access to the household finances, concerns may arise regarding the management of marital assets.
In the state of Michigan, any property acquired by a couple during their marriage is considered joint or marital property. Typically, both partners possess the right to withdraw funds from shared accounts and utilize their combined resources. However, when one spouse experiences cognitive impairment, they may struggle to make appropriate decisions regarding these shared funds and assets.
The devastating effects of cognitive decline in a spouse can result in significant financial challenges, potentially impacting the couple’s financial stability and future plans. Therefore, it becomes imperative to address these concerns and explore strategies to protect both the affected spouse and the marital assets from potential mismanagement or loss.
Durable Power of Attorney for Finance
In order to safeguard marital assets, one option available is for the spouse to establish a durable power of attorney for finance. This legal arrangement empowers an individual to designate someone, typically their spouse, to make financial decisions on their behalf if they become incapacitated. While this can serve as a means for the spouse to protect their shared assets, it is crucial for the impaired individual to create their power of attorney for finances before their capacity diminishes to the point where they are unable to sign legal documents.
Conservatorship
In the event that the spouse has not established a power of attorney for finance and subsequently becomes incapacitated, it may become necessary to seek a court-appointed legal conservatorship. To initiate this process, either the concerned spouse or another party must file appropriate documentation with the probate court, stating that the incapacitated spouse lacks the capacity to make financial decisions and requires a conservator to act on their behalf. While the spouse is often appointed as the conservator, there is a possibility that the court may designate someone else for this role. Once appointed, the conservator assumes responsibility for managing the individual’s financial affairs and related matters. They are required to provide regular reports to the court and maintain comprehensive records detailing their performance of duties. It is important to view conservatorship as a last resort due to its time-consuming nature, associated expenses, and emotional toll. By proactively planning ahead and establishing a durable power of attorney, it is generally possible to avoid court intervention and maintain privacy in personal matters.
Practical Considerations
In a situation where effective communication with a spouse is hindered by their cognitive condition, it is advisable to take certain practical steps to safeguard marital assets. Firstly, it may be necessary to collect and secure their credit cards, debit card, and checkbook, while transferring all joint assets into accounts solely under the individual’s name.
- Moreover, if the impaired spouse has access to digital accounts, it is essential to change the passwords and assume responsibility for online bill payments;
- To address concerns about upsetting the spouse, it is possible to establish an arrangement wherein they have access to a limited amount of cash or a prepaid debit card for necessary purchases;
- It is important to note that not all powers of attorney carry the same weight. It is common for us to encounter powers of attorney that are defective or lack the necessary authority, particularly in situations involving long-term care and asset protection;
- Thoroughly reviewing and ensuring the adequacy of the power of attorney is crucial for effective financial management;
- Adapting to these adjustments in handling finances with an impaired spouse can be challenging, particularly when their condition has progressed to the extent of impairing their cognitive abilities. However, through careful planning, it is possible to protect marital resources in such circumstances.
With our experience in assisting married clients in asset planning under similar circumstances, we can provide the guidance necessary to navigate this complex process.
To wrap up
In conclusion, navigating the challenges posed by a spouse’s cognitive impairment and its impact on marital finances requires proactive measures and thoughtful decision-making. The emotional toll and complexities involved in protecting marital assets cannot be underestimated. However, by implementing practical considerations such as establishing a durable power of attorney for finance, exploring conservatorship as a last resort, and making necessary adjustments to financial arrangements, couples can strive to safeguard their shared resources. Seeking professional guidance and legal expertise is crucial to ensure that the chosen strategies align with individual circumstances and legal requirements. Remember, planning ahead and taking steps to protect marital assets can bring a sense of security and stability during a difficult time, enabling couples to focus on providing care and support to their impaired spouse while maintaining their own financial well-being.