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For many families, concerns about a parent’s cognitive health arise gradually. A missed appointment, some confusion over finances, or a subtle shift in decision-making can prompt adult children to start asking questions they had not considered before.

These small moments and changes are worth noting for a number of reasons, including as a reminder to review estate plans. For families with significant assets, ongoing business concerns, and other complex planning needs, cognitive decline in a parent often requires that we address legal and financial considerations sooner rather than later. At Sessa & Dorsey, we work with families navigating this exact situation, helping them put the right structures in place now while we have the opportunity to adjust.

The Legal Landscape: Why Timing Matters

Estate planning documents that are intended to be effective during a person’s incapacity, such as powers of attorney, advance directives, and trust agreements, require the person signing them to have legal capacity. This means they must understand what they are signing (the subjects covered, meaning, and effect) and which powers they are delegating to whom.

Laws are well equipped to operate in two distinct situations: when a person is fully capable, and when a person has fully and clearly lost capacity. However, they are often far less effective at navigating the space in between, when a person is in the process of declining. In this gray area, there is often confusion about how families can proceed, who has authority to act, and whether any new documents executed by a parent during this period are valid. When adjustments are made to estate plans during this period of uncertainty, the documents can be challenged, decisions can be contested, and families can find themselves in costly and time-consuming legal disputes.

For families with substantial assets, business interests, or complex trust structures, the stakes are particularly high. The right plan, created well before it is needed, can help your family limit this exposure and minimize many of the logistical frustrations of managing care and finances while a parent is in decline. 

What Happens Without a Plan

If a parent loses capacity without the right documents in place, the family may have no choice but to seek a guardianship or conservatorship through the courts. This is a time-consuming and expensive process that undermines the individual’s autonomy, often requiring private details to be presented before the Court and placed on the public record. Once the Court determines who will have decision-making authority, the process continues under Court oversight, with annual reports and accountings that must be filed. For more on how Maryland courts handle capacity determinations, visit the Maryland Courts resource on guardianship.

Limiting your estate plan to a Will leaves significant gaps because a Will is only effective after death. It does nothing to address who manages finances and oversees assets, or makes healthcare decisions during a period of incapacity. For families with diversified portfolios, business interests, or multi-generational planning strategies, these gaps often have serious consequences.

The Right Tools for Planning Ahead

Several estate planning instruments are particularly helpful when cognitive decline is a concern for the future:

• A durable financial power of attorney designates a trusted person to manage financial affairs in spite of any decline or loss of capacity. Without one, accessing accounts, paying bills, or managing investments on a parent’s behalf may require court intervention. Maryland’s General and Limited Power of Attorney Act presents two statutory forms that, if properly utilized, can reduce some of the frustration when financial decision-making needs to transition from an aging parent to the designated agent or attorney-in-fact.
  
  
• An advance directive (combining a living Will and medical power of attorney) not only designates an agent to make healthcare decisions during incapacity, but also provides an opportunity to express wishes regarding medical treatment and end-of-life care. Maryland’s Health Care Decisions Act governs how these documents work and are used by families and healthcare providers.
  
  
• A revocable living trust is one of the most effective tools available for estate planning, particularly for those with significant or complex assets where a durable financial power of attorney alone cannot readily address every need. Unlike a Will, a properly drafted revocable trust can allow your family to navigate any period of incapacity in addition to managing the distribution of assets following death. Assets held in the trust are managed by the trustee, who may initially be your parent, with a successor trustee stepping in seamlessly if they become incapacitated, or the arrangement may involve one or more co-trustees at various stages. This transition happens privately, without the need for court involvement or oversight, and can include more detailed instructions for how certain interests should be managed, whether independent of or in conjunction with your financial power of attorney.

Starting the Conversation

Raising these topics with an aging parent requires care and sensitivity. The goal is not to suggest that a parent can no longer manage their own affairs; in fact, it is important that these conversations begin before any decline, if feasible. That way, we can focus on ensuring that a comprehensive plan is in place before circumstances make planning more difficult, if not impossible.

Framing these conversations around legacy, values, and long-term family goals tends to be more productive than focusing on decline or loss of control. Starting discussions early not only allows your parents the dignity to shape and control how their affairs will be handled as needs change, but also gives your family the opportunity to better understand your parents’ wishes while they are still available to guide decisions.

It is important to remember that while an aging parent has legal capacity to make decisions and manage financial affairs, they are in charge and have the final word, even as capacity may begin to decline. Starting the conversation now and continuing to review and discuss these estate planning matters as parents age can help ease the transition of decision-making from an aging parent, as they have greater confidence that their families and agents know and understand their wishes.

If the conversation is difficult to initiate, involving a trusted advisor, whether an estate planning attorney, financial advisor, or family physician, can help. 

The Value of Acting Early

The families who navigate this transition most successfully are those who put a comprehensive plan in place before circumstances require it, and continue to discuss plans to ensure they address changing needs. Once capacity is in question, the range of available planning options narrows considerably, and the process of putting documents in place becomes more complicated if not impossible.

At Sessa & Dorsey, we understand that planning for a parent’s future is as much an emotional process as it is a legal one. We work with Maryland families at every stage, from putting the right foundational documents in place and revising plans as circumstances shift, to trust administration and estate settlement, with the care and attention that these conversations deserve. Our attorneys coordinate closely with financial advisors, CPAs, and other members of your advisory team to ensure that every element of your plan is aligned and prepared for what lies ahead.

If you are concerned about a parent’s capacity or would like to review your family’s estate plan, contact Sessa & Dorsey at (443) 589-5600 or schedule a consultation.