Dementia is one of the most prevalent diseases in our society. Leading industry group, Dementia Australia, estimates that without a medical breakthrough, by 2058 there will be almost 1.1 million people with dementia in the country. Already, it’s the second leading cause of death among Australians and the leading cause of death for women.
As these statistics show, dementia is a serious and growing issue, and it’s important to consider how your affairs would be managed if you’re diagnosed with this disease.
According to Dementia Australia, dementia is a cluster of diseases that cause cognitive impairment. A dementia diagnosis can vary in seriousness between two extremes.
In the first case, the individual may have completely lost legal capacity. In this situation, the person is no longer capable of appointing an attorney or an enduring guardian. However, in some circumstances, an application can be made to a court to make a statutory Will for that person. Family members may also make an application for an administration order, which is a substitute for a power of attorney, although this is a complex process.
At the other extreme, the dementia diagnosis occurs where there is little current cognitive impairment but that impairment will worsen over time, meaning the person is still capable of making decisions in the meantime. In other words, they retain legal capacity, but they may have noticed they are having more trouble with memory or other cognitive functions.
Typically, when a person or their family notices a decline in cognitive capacity, a doctor will perform a mini mental state test. Depending on the results, the doctor may make a referral to a specialist for a more formal diagnosis.
“Assuming the individual still has capacity, the priority after a dementia diagnosis should be to make a Will and do a general enduring power of attorney – appointing someone who can make decisions about assets, accounts, deposits, investments and contracts when the diagnosed person is no longer able to,” explains TPT Wealth Senior Estate Planner Ewan Stewart.
“Being appointed an attorney comes with a high degree of moral risk, because the attorney has control of and access to all the assets. The risk tends to be lower if you appoint a family member, usually because there are bonds of affection and a sense of fair play. The moral hazard may be higher if you appoint a person outside your inner circle,” says Stewart.
A power of attorney needs to be registered to take effect. When this occurs the attorney is empowered to deal with assets but should always obtain direction from the person they have been appointed to represent, as long as they are capable of providing instruction. It’s essential to select someone you trust implicitly.
If you don’t have a family member or close friend, it may be beneficial to select an institution such as TPT Wealth as your attorney, as these types of organisations are independent and operate under strict regulatory supervision. This can give people peace of mind their instructions will be carried out without putting pressure on their loved ones.
“A dementia diagnosis a devastating for the person diagnosed, as well as their loved ones. Decisions need to be made about who’ll have the legal power to act on your behalf over financial and legal affairs and matters regarding lifestyle, health and welfare. It’s also a prompt to tidy up your superannuation nominations,” says Alan Logan, General Manager – Wealth Management, TPT Wealth.
“You could also and consider appointing an enduring guardian, who can makes decisions about your care when you have lost capacity.
“The guardian is your substituted decision maker for care and accommodation decisions, such as the medicines you take, the doctors you see and your wishes about aged care,” he says.
Assuming the individual still has capacity, an important decision will be who to appoint to wind up their affairs and distribute their assets on their death. This person(s) or organisation appointed under the will to undertake these tasks is known as the ‘executor’. This is a role TPT Wealth can carry out.
Above all, it’s important to understand a dementia diagnosis is just that. Many people with dementia have the capacity to sign legal documents such as a Will, and make decisions about their assets for some time, often many years. But it is a serious condition and a diagnosis should be the catalyst to get your affairs in order in a timely fashion.
The above information is general in nature and not intended to provide advice to particular individuals, or take into account an individual’s personal objectives, circumstances and needs for consideration. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information.
 Dementia Australia statistics, https://www.dementia.org.au/statistics, accessed 20/01/22.