Watching family members who suffer from mental illness can be tough. It’s hard to watch them struggle with their day-to-day life. Parents of mentally ill children often stay up late at night, wondering what will happen to their son or daughter after their parents are gone.
If you have a loved one who is living with a mental illness, it’s important to make sure their, and your, financial needs are taken care of. Here are some aspects you should consider when it comes to financial planning for people with mental illnesses.
Making sure their basic needs are met on a day-to-day basis
The first step to caring financially for a loved one with serious mental health illnesses is to make sure their day-to-day needs are met. You might be able to accomplish this in a few different ways.
The easiest way to allow someone to make financial decisions for their loved one is to sign a durable financial power of attorney. Under a power of attorney, the agent is allowed to make financial decisions on behalf of the person who signed the document (the principal). This includes managing their bank accounts, paying off debts, and generally controlling their money.
To sign this document, your loved one will need to be legally capable of understanding what rights they are giving their agent. If you know that serious mental illness runs in your family, you may be able to put this document into place as a precaution.
In cases where your loved one isn’t capable of signing a power of attorney, you may need to seek a conservatorship. This arrangement gives you control over your loved one’s financial decisions without their consent. A judge must approve and oversee the arrangements to prevent conservatorship abuse.
California recognizes LPS conservatorships, which were specifically designed for people to care for their loved ones with serious mental illnesses. Under this legal arrangement, a parent, sibling, or other court-appointed conservator can make decisions for the conservatoree, including putting them in appropriate mental health care facilities.
Power of attorneys and conservatorships help prevent people suffering from mental illness from squandering their money when they don’t realize what they’re doing. They also allow family members to make sure their relatives can receive appropriate care for their daily needs.
Establishing a trust for long term financial care
In addition to making sure you have the ability to make financial decisions for your loved one, you’ll also want to make sure there are appropriate financial resources for their ongoing care.
One way to do this is establish a living trust as part of your estate plan. Generally, trusts are a way to avoid having your assets go through probate after you die. Trusts are also a way to make sure that your loved one will receive more than the bare minimum of care when you’re gone.
It’s important to get the wording right for this type of trust. On the one hand, you want to make sure they receive all the social security, supplemental security income (SSI), social security disability (SSD), and other government benefits they are entitled to.
On the other hand, some of these programs have income limitations. You want to make sure that your financial support does not conflict or override these government benefits. Working with a trust attorney can help make sure the trust provides maximum protection for your loved one in the years to come.
As you are establishing this trust, don’t ignore your own financial needs. Work with your estate planning attorneys, your financial planner, and a financial therapist if needed, to make sure that your retirement plan is fully funded.
Making provisions for their care after you’re gone
Finally, it’s important to make sure that your loved one has appropriate care if something happens to you. This is especially the case for parents and grandparents of mentally ill children.
Power of attorney documents have provisions for successor agents if the original agent is unable to assume responsibility. If your family member is legally capable of signing a power of attorney, it’s a good idea to nominate multiple successor agents for this role.
Similarly, it’s a good idea to have a successor conservator prepared to step in. Accidents happen, and you don’t want to worry about gaps in care.
Work with an experienced estate planning attorney
Financial planning for mental illness patients can be tough. It’s important to have the right players on your team. An estate planning attorney who is experienced with conservatorships is essential when it comes to picking the right course of action for a family member suffering from long-term mental illnesses. Contact us today for a free consultation.