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Dementia - 3 trees in different seasonal stages

Does dementia equate to incapacity? Here's important info you need to know

by Legacy Plan
March 6, 2020

When someone is diagnosed with Alzheimer's disease or dementia, a question that often arises is whether that individual is now automatically deemed legally incapacitated or of unsound mind. There are also concerns about that an individual's ability to function and handle everyday issues and decisions. This article provides answers and insights to these important issues.

In reality, when someone is diagnosed with Alzheimer's disease or dementia, they are not immediately considered incapacitated or of unsound mind. A legal determination of whether someone is incapacitated needs to be made by a court. There is no presumption or immediate trigger based solely on a medical diagnosis.

What is the process of legally deciding incapacitation?

A legal finding of incapacitation generally occurs after a petition has been filed in a court seeking a determination be made by a judge. The court proceeding is known as guardianship. The individual who filed the petition and the individual alleged to be incapacitated will need to be represented by counsel.

It is quite common for the court to utilize an examining committee that will meet with the individual and prepare a report for the judge as to their opinion of the individual's capacity to make certain decisions. If all members of the committee determine that the individual lacks capacity, the judge will find that the individual is legally incapacitated and enter an official order. However, even when an incapacitation order is entered, it does not mean a guardian will automatically be appointed. For example, if there are legal documents in place (powers of attorney and/or health care directive) that enable someone to manage the affairs of the incapacitated person, the court will likely respect the terms of those legal documents.

What are the ramifications of a court declaring someone to be incapacitated?

Dementia - Doctor exam and review

When someone is declared completely incapacitated by a court, it is life-altering decision that has significant ramifications. For example, that individual will lose the right to make any decisions regarding their finances or personal welfare, including where they reside, the medical care they receive and how their money is spent or distributed.

It is worth noting that someone can be deemed “partially” incapacitated, which means someone may lose their ability to make certain decisions, such as what to do with their money.

Dementia is a growing issue across the globe

It is important to address the issue of a dementia diagnosis in your estate plan. Why? Because more and more people are being diagnosed with dementia. For example, a dementia diagnosis is made every 3 seconds across the globe. There are close to 50 million people worldwide living with dementia, and this number is expected to almost double every 20 years. That means there could be up to 75 million people living with dementia in 2030 and 131.5 million in 2050, according to Alzheimer's Disease International. The total estimated worldwide cost of dementia is in excess of $1 trillion, which includes the costs associated with informal care (i.e. unpaid care provided by loved one), direct costs of social care and the direct costs of medical treatment (i.e. the costs of treating dementia and other conditions in primary and secondary care).

Is mild cognitive impairment the same as having dementia?

If you are diagnosed with mild cognitive impairment, it does not mean that you have full-blown dementia. It also does not mean that you lack the capacity to create certain legal documents, like a revocable trust or living will. Nevertheless, it is important to be proactive and take steps to protect yourself and your estate.

How can I protect myself and my estate if I become incapacitated?

There are certain proactive steps you can take to protect your estate, and your rights, in the event you were to become incapacitated. For example, you should consider speaking to an experienced estate planning professional to help draft an advance directive (living will), which would enable you to appoint a trusted individual to make important health care decisions on your behalf when you are unable to due to incapacity. Another step you can take is establishing a revocable living trust. This type of trust can be set up to allow you to control the assets in the trust and transfer control automatically to a successor trustee appointed by you if you were to be deemed incapacitated. Another great aspect of a revocable trust is that you have a tremendous amount of power and flexibility over the terms of the trust. For example, you could potentially be able to define what is considered “incapacitated” in the context of a living trust.

Are there other ways intervention can be triggered?

If you are concerned about a loved one's mental capacity to handle certain affairs, but you do not want to haul them into court and go through a contentious and impersonal legal process, there are other ways to achieve intervention in a more personal way. For example, it may be possible for the loved one to see their physician and the physician drafts a letter stating that the individual is no longer able to make certain decisions related to health care, finances, etc. Putting this assessment in writing and in the patient's medical record can actually trigger a health care surrogate's authority to act on behalf of the loved one. In other instances, this letter can be used to enable a successor trustee under a trust to take over financial management of a trust account. However, it is important to understand that this type of letter does not establish that an individual is legally incapacitated.

How do I create an estate plan?

There are numerous options and scenarios to consider when developing an estate plan that protects your legacy and achieves your objectives, and important decisions should be made with the advice of qualified lawyers and financial experts. Membership with Legacy Assurance Plan provides members with valuable resources and guidance to develop comprehensive estate plans that take life's contingencies into consideration and leave a positive impact for generations to come. Legacy Assurance Plan members also receive peace of mind that a team of trusted, experienced professionals will assist them in developing legal, financial and tax strategies that will meet their needs today and for years to come through periodic reviews.

This article is published by Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at

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