Parent Has Dementia and No Estate Plan? Do This Now

A Story That Changes Everything

It was a Tuesday afternoon when Karen called our office. Her voice was shaking.

Her mother, Carol, had just been diagnosed with early-stage Alzheimer's. Karen had spent the weekend at her mother's home sorting through mail, finding unpaid bills, and searching for any sign of a will, a trust, or legal paperwork.

There was nothing.

No power of attorney. No health care directive. No will. No trust. Just a home that Carol had paid off 12 years ago, a savings account with $280,000, and a daughter who had no legal authority to do anything.

"What do I do?" Karen asked.

If you are reading this article, there is a good chance you are asking the same question. Maybe you just got a diagnosis. Maybe you have been watching a parent decline and the reality is finally setting in. Maybe you are worried it is getting late.

I want to give you a straight answer. Not legal jargon. Not a lecture. Just what you need to know — right now.

In nearly 30 years of practicing estate and elder law, I have helped hundreds of families in exactly this situation. Some of them called us early enough to protect everything. Some called us when it was almost too late. A few called when it was too late.

This article will tell you exactly what you need to do, what tools are still available to you, and what mistakes to avoid. Read every word. Your family's financial future may depend on it.

Quick Answer: My parent has dementia and no estate plan. What should I do first?

Call an elder law attorney immediately. The window for your parent to sign legal documents may be closing. The most urgent priority is establishing powers of attorney while your parent still has legal capacity. After that, you need a plan to protect their home and savings from the cost of long-term care. Time is the most important factor in this situation.

Why Time Is Everything When Dementia Is Involved

Here is the first thing I need you to understand. Dementia does not disqualify a person from signing legal documents — but it can. The question is not whether someone has a dementia diagnosis. The question is whether they currently have legal capacity.

Legal capacity means the person understands what they are signing, who their family members are, and what they own. Early-stage dementia patients often still have this capacity. Mid to late-stage patients often do not.

Warning: The Window Closes Fast

Once a person loses legal capacity, they can no longer sign a power of attorney, a health care directive, a trust, or any other legal document. At that point, the only way to gain legal authority over their affairs is through the courts — a process called guardianship or conservatorship. It is expensive, time-consuming, and heartbreaking.

Do not wait to find out how much capacity your parent has left. Every week you delay is a week closer to losing the option to plan.

The Cost of Waiting: Robert and Patricia's Story

Robert called our office six months after his wife Patricia was diagnosed with vascular dementia. He had been focused on her care — finding the right doctors, adjusting their home — and had put off the legal paperwork.

By the time he called us, Patricia could no longer pass a capacity assessment. She could not remember the names of her children. She did not understand what a power of attorney meant.

To gain legal authority over her affairs, Robert had to file for guardianship in court. It took several months and cost over $5,000 in legal and court fees. Their home and savings were exposed during that entire period.

Had he called us six months earlier, we could have put everything in place in a matter of weeks and without the need of involving the court.

Step 1: Establish Powers of Attorney Immediately

The single most urgent legal document for a parent with dementia is a power of attorney. There are two kinds you need, and you need both of them.

Financial Power of Attorney

A financial power of attorney — also called a durable power of attorney — gives a trusted person the legal authority to manage your parent's money, pay their bills, manage their bank accounts, handle their investments, file their taxes, and deal with their property.

Without this document, you have no legal right to touch your parent's finances. None. Even if you are their adult child. Even if you have been helping them manage their affairs for years. Banks, investment companies, and the IRS will not talk to you without legal authority in writing.

What "Durable" Means — And Why It Matters

The word "durable" is critical. A standard power of attorney becomes invalid if the person becomes incapacitated. A durable power of attorney stays valid even after incapacity. For a parent with dementia, you need a durable power of attorney — not a standard one.

Make sure the document was drafted by an experienced attorney and is compliant with the laws of the state where your parent lives. Florida and Minnesota each have specific requirements. A document that does not meet those requirements can be rejected by banks and financial institutions.

Health Care Power of Attorney and Living Will

The second set of documents addresses medical decisions.

A health care power of attorney — sometimes called a health care proxy or health care surrogate designation — gives someone the legal authority to make medical decisions for your parent when they can no longer make those decisions themselves.

A living will — also called an advance directive — is a written record of your parent's wishes for end-of-life care. It answers questions like: Do they want to be kept on life support? Do they want aggressive treatment or comfort care? What does a natural death look like to them?

These documents do two things. First, they make sure your parent's wishes are actually followed. Second, they protect families from one of the most painful situations I see in my practice — adult children who disagree about what mom or dad would have wanted. I have watched close families fall apart over these decisions. The right documents prevent that from happening.

When There Is No Health Care Document: The Miller Family

Margaret passed away in a memory care facility without a health care directive. Her three adult children — two who lived locally and one who lived out of state — could not agree on her care.

The two local children wanted to transition her to comfort care. Her son in California wanted everything possible done to extend her life. Without a document expressing Margaret's wishes, the facility had to treat her case conservatively.

She spent the final four months of her life receiving aggressive interventions she had told her daughters for years she never wanted. The family has not spoken since her funeral.

A living will costs a few hundred dollars to prepare. The cost of not having one is incalculable.

Step 2: Understand the Difference Between a Will and a Trust

Most people believe that if their parent has a will, they are covered. In my experience, this is one of the most expensive misconceptions in estate planning. Let me explain the difference clearly.

What a Will Does — And What It Does Not Do

A will is a legal document that says who gets your parent's property after they die. It names an executor to manage the estate. It may name a guardian for minor children. It expresses final wishes.

What a will does not do is equally important. A will does not take effect until death. It does nothing while your parent is alive and incapacitated. And — this surprises most people — a will does not avoid probate. In fact, a will guarantees probate.

A Will Does NOT Avoid Probate

Probate is the court process that validates a will and oversees the distribution of assets. It is public — anyone can look up what your parent owned and who got it. It is slow — Florida and Minnesota probates routinely take one to two years. And it is expensive.

In Florida, personal representative and attorney fees are set out in state statute 733.1617 and a good rule of thumb is 3% to each of the personal representative and the attorney. On an estate with a $400,000 home and $200,000 in savings, the combined attorney fees for the personal representative and the estate can easily exceed $24,000 — and that does not include court costs, accounting fees, or other expenses. Minnesota statutes set the fee as “reasonable compensation”. However, a good rule of thumb is to also budget 3% of the assets going through probate.

If your parent has a will and nothing else, their estate will go through probate. A will is better than nothing — but it is far from a complete plan.

What a Revocable Living Trust Does — And Its Limits

A revocable living trust is a legal document that holds your parent's assets during their lifetime and distributes them after death — without going through probate. It is private, typically faster than probate, and far less expensive for the family.

A trust also works while your parent is alive. If they become incapacitated, the successor trustee can step in and manage the trust assets without any court involvement. That is a significant advantage over a will.

However — and this is critically important — a revocable living trust does not protect assets from long-term care costs. Because the trust can be revoked and changed, Medicaid treats the assets in a revocable trust as if they belong to your parent outright. They are fully counted when determining Medicaid eligibility.

Does a revocable living trust protect assets from a nursing home?

No. A revocable living trust does not protect your parent's home or savings from long-term care costs or Medicaid spend-down requirements. Even if your parent has a revocable trust, additional planning is needed to protect their assets from nursing home costs. This is one of the most common and costly misunderstandings in elder law.

I want to be very direct here. I have met with families who believed their parents were fully protected because they had a revocable trust set up years ago. They were not. Their home and savings were still fully exposed to nursing home costs. Additional planning — the kind of planning I will describe below — was still needed.

Step 3: Face the Real Cost of Dementia Care

Before we talk about protecting assets, you need to understand what you are protecting against. The cost of dementia care is staggering — and it is getting worse every year.

What Care Actually Costs in Florida and Minnesota

Here is a realistic picture of current long-term care costs in both states as of the writing of this article in 2026:

In-Home Care (44 hours per week)

Florida: approximately $82,000 per year | Minnesota: approximately $96,000 per year

Assisted Living / Memory Care

Florida: approximately $60,000 to $90,000 per year | Minnesota: approximately $75,000 to $96,000 per year

Nursing Home (Semi-Private Room)

Florida: approximately $120,000+ per year | Minnesota: approximately $140,000+ per year

Nursing Home (Private Room)

Florida: approximately $150,000+ per year | Minnesota: approximately $155,000+ per year

Alzheimer's and dementia are different from most medical conditions. They do not follow a short recovery arc. The average person with Alzheimer's lives 8 to 10 years after diagnosis — and spends the last three to five of those years requiring full-time care. Do the math on $140,000 per year for five years. That is $700,000. That is most people's entire life savings.

Does Medicare Cover Dementia Care?

This is one of the most common questions I hear — and the answer surprises almost everyone.

Medicare does not cover long-term custodial care. It does not pay for memory care facilities, assisted living, or nursing home care if the primary need is help with daily activities like bathing, dressing, and eating. Medicare is designed for short-term skilled medical care — like recovering from surgery or a hospital stay.

Medicare may cover a short stay in a skilled nursing facility after a qualifying hospital stay, but coverage phases out after 20 days and stops entirely after 100 days. For the long-term care that dementia patients need, Medicare provides almost nothing.

Medicaid is the government program that does pay for long-term care — but it comes with strict eligibility rules and a significant catch, which brings us to the most important part of this article.

Step 4: Understand Medicaid — Before You Make Any Moves

Medicaid is a joint federal and state program that pays for nursing home and long-term care costs for people who qualify financially. In both Florida and Minnesota, Medicaid can be the difference between a family keeping their savings and losing everything.

But Medicaid has rules that catch most families completely off guard. Understanding these rules — before you do anything with your parent's money or property — is essential.

The Medicaid Asset Limits

To qualify for Medicaid long-term care benefits, your parent generally cannot have more than $2,000 in countable assets in their name. In Minnesota, there are some variations based on marital status and other factors. In Florida, the rules for married couples are somewhat different than for single individuals.

Countable assets include checking accounts, savings accounts, investment accounts, retirement accounts in some cases, second homes, and most other financial assets. Some assets are exempt — including the primary home (with conditions), one vehicle, personal belongings, and certain prepaid burial arrangements.

The 60-Month Lookback Period — The Rule That Trips Up Most Families

Warning: The Medicaid Lookback Period — What You Must Know Before Giving Anything Away

When your parent applies for Medicaid long-term care benefits, Medicaid looks back at every financial transaction they made during the previous 60 months — five years. Any gifts, transfers, or asset movements made for less than fair market value during that window are flagged as improper transfers.

For each improper transfer, Medicaid imposes a penalty period — a period of time during which your parent is ineligible for benefits, even if they are otherwise qualified. The penalty period is calculated by dividing the transferred amount by the average monthly cost of nursing home care in your state.

Here is an example: If your parent gave $120,000 to their children two years before applying for Medicaid, and the average monthly nursing home cost in Florida is $9,000, Medicaid would impose a penalty of approximately 13 months during which they would receive no benefits. Your parent would have to pay privately for that entire period.

This penalty does not start until your parent is otherwise eligible for Medicaid and needs care. That means the money may already be spent — and the penalty period is still counting.

The $200,000 Gift That Became a Disaster

Thomas and his sister thought they were being smart. Their mother Dorothy, recently diagnosed with dementia, had $200,000 in savings and a paid-off home. They were worried about losing everything to a nursing home.

A friend told them to "just give the money to the kids." So they did. Over the course of several months, Dorothy transferred $200,000 to Thomas and his sister.

Three years later, Dorothy needed full memory care. The family applied for Medicaid. The caseworker pulled the bank statements. All $200,000 in transfers showed up in the lookback period.

The penalty period was over 22 months. Dorothy was in a nursing home, she was otherwise Medicaid-eligible, but she could not receive benefits for almost two years. The family had to come up with $180,000 in private-pay nursing home costs during that period — money they had already spent or invested.

Had they worked with an elder law attorney before making those transfers, we could have used legal strategies to protect those assets without triggering a Medicaid penalty at all.

What About the Family Home?

The family home is often the most valuable asset a parent owns — and one of the most misunderstood when it comes to Medicaid.

While your parent is alive and living in the home — or intends to return to it — the home is generally exempt from Medicaid's asset limit. Medicaid will not count it against them when determining eligibility.

However, that protection ends at death. After your parent passes away, Medicaid can file a claim against their estate to recover what it paid for their care. This is called Medicaid estate recovery. In many cases, it means the family home must be sold to repay Medicaid.

There are legal strategies to protect the home — but they must be put in place before a Medicaid application is filed, and ideally years before care is needed.

Step 5: Learn What Legal Tools Can Still Protect Your Parent's Assets

Here is the good news. Even after a dementia diagnosis, there may still be tools available to protect your parent's home and savings. The options depend on how much capacity your parent still has, how much time you have, and the specifics of their financial situation.

Medicaid Asset Protection Trust (MAPT)

A Medicaid Asset Protection Trust — sometimes called an irrevocable Medicaid trust — is a specialized trust designed to hold assets outside of your parent's estate for Medicaid purposes. Assets transferred into a MAPT are generally not counted toward Medicaid eligibility — but only after the 60-month lookback period has passed.

This is why timing matters so much. The sooner a MAPT is established, the sooner the clock starts running on the lookback period. A parent who is in the early stages of dementia and still has legal capacity may still be able to create a MAPT — but the window may be closing.

Once assets are in a MAPT, your parent cannot take them back. The trust is irrevocable. But the trust can still allow your parent to live in the home, and some income from trust assets may still be available depending on how the trust is structured. This is complex planning that must be done by an experienced elder law attorney.

Spousal Protection Planning

If your parent with dementia is married, there are additional protections available. Federal law gives the healthy spouse — called the community spouse — certain rights to keep assets and income even when the ill spouse is on Medicaid.

The community spouse is entitled to keep their own assets up to a certain limit, known as the Community Spouse Resource Allowance (CSRA). In Florida, the community spouse can keep up to approximately $154,140 (the 2024 limit, adjusted annually). In Minnesota, similar protections apply.

The community spouse also has income protections. Medicaid cannot leave a community spouse impoverished. These rules are complex and must be carefully applied — but they exist specifically to prevent the healthy spouse from being left broke while the ill spouse receives care.

Caregiver Agreements

One legal strategy that most families have never heard of is a personal services contract — also called a caregiver agreement. If an adult child has been providing care for their parent, a properly drafted caregiver agreement can allow the parent to pay that child for past and future care services at fair market rates.

These payments can reduce the parent's countable assets and compensate the child for their time — but they must be done carefully, documented thoroughly, and structured by an attorney to avoid Medicaid disqualification.

What If My Parent No Longer Has Capacity?

If your parent can no longer sign legal documents, the options are more limited — but not gone.

Guardianship and conservatorship proceedings allow a court to appoint a legal guardian to make decisions for an incapacitated person. This is expensive and time-consuming, but it does give a family member legal authority to act.

In some cases, a court-appointed guardian can take limited steps to protect assets, depending on state law and the specific circumstances. An experienced elder law attorney can advise on what is still possible even after capacity is lost.

Do Not Give Up If Capacity Is Already Gone

Many families call us believing it is "too late" because their parent can no longer sign documents. In most cases, it is not too late to do something. The options may be narrower, but there are still steps we can take to protect what is left. The most important thing you can do right now is call an elder law attorney and find out what is still available to your family.

Step 6: Even If Your Parent Has a Trust — Do Not Stop Reading

I want to address something I see constantly in my practice. Families come in and say, "Mom and Dad are fine — they have a revocable living trust their attorney put together 10 years ago."

And I have to deliver difficult news.

A standard revocable living trust is a wonderful estate planning tool. It avoids probate. It keeps things private. It makes the transition easier for the family after death. I recommend revocable trusts for nearly all of my estate planning clients.

But a revocable living trust does not protect assets from long-term care costs. Medicaid counts the assets in a revocable trust exactly as if they were sitting in your parent's bank account.

If your parent has a revocable trust and faces a dementia diagnosis, that trust needs to be reviewed immediately by an elder law attorney — not an estate planning attorney who does not also practice elder law, but someone who understands both disciplines and how they intersect with Medicaid planning.

In many cases, there are steps we can take to add a layer of long-term care protection to an existing plan. But it requires action now, not later.

The 7-Step Action Plan: What to Do Right Now

Let me bring this all together into a clear action plan. If your parent has been diagnosed with dementia and has no estate plan — or an incomplete one — here is what you need to do.

Contact an elder law attorney this week.

Not next month. Not after the holidays. This week. Every week you wait is a week of the lookback clock you are not running and a week closer to losing capacity to sign documents.

Get a capacity assessment from your parent's physician.

Your attorney will need to know the current state of your parent's cognitive capacity before advising on what documents can still be signed. Ask the doctor directly: does my parent currently have the capacity to sign legal documents?

Establish powers of attorney immediately if capacity exists.

Durable financial power of attorney and health care documents are the most urgent priority. These allow you to act on your parent's behalf legally and avoid a costly and painful guardianship proceeding.

Gather a complete picture of your parent's assets.

Before any planning can be done, your attorney needs to know what your parent owns. Collect bank statements, investment account statements, retirement account details, property deeds, and insurance policies.

Do not move, transfer, or gift any assets yet.

Do not do anything with your parent's money or property until you have spoken with an elder law attorney. Unplanned transfers are one of the most common ways families accidentally create Medicaid penalties. Even well-intentioned gifts can trigger a lookback penalty that costs far more than the gift was worth.

Review any existing estate plan documents.

If your parent has a will, a trust, or other documents, bring them to your elder law attorney for review. As discussed above, existing documents may need to be updated or supplemented with additional long-term care planning.

Start the conversation with siblings now.

Family conflict is one of the biggest obstacles to getting planning done. Get all the key family members on the same page as early as possible.

Frequently Asked Questions

Can a person with dementia sign a power of attorney?

It depends on whether they currently have legal capacity — not just a diagnosis. Many people in early-stage dementia still have sufficient capacity to sign legal documents. A physician can assess capacity, and an experienced attorney can guide the signing process appropriately. Do not assume it is too late without having this assessed.

What happens if my parent has no power of attorney and loses capacity?

If your parent can no longer sign legal documents and has no power of attorney in place, the only way to gain legal authority over their affairs is through guardianship or conservatorship court proceedings. In Florida and Minnesota, this typically costs between $5,000 and $15,000 or more and takes several months to complete.

Is it too late to protect assets if my parent already needs care?

Not necessarily. Even when care has already begun, there may be planning strategies available depending on your parent's specific situation, the state they live in, their marital status, and what assets they still have. An elder law attorney can assess what is still possible and help you maximize what can be protected.

What is the difference between estate planning and elder law?

Estate planning focuses on what happens to your assets after you die — wills, trusts, beneficiary designations, powers of attorney, and tax planning. Elder law addresses what happens while you are alive but incapacitated or in need of long-term care — Medicaid planning, nursing home cost protection, guardianship, and related issues. For families dealing with dementia, you need an attorney who is skilled in both disciplines.

Does long-term care insurance help?

If your parent already has a long-term care insurance policy, that is a significant asset — review the policy carefully and understand the benefits, elimination periods, and coverage limits. If they do not have a policy, purchasing one at an advanced age or with a dementia diagnosis is generally not possible. For families without long-term care insurance, Medicaid planning becomes the primary strategy for protecting assets.

A Final Word From Chuck Roulet

Why I Practice Elder Law

I watched my grandparents lose everything to a nursing home — their homes, their savings, and ultimately their dignity — because at the time, Minnesota was not following federal law. My grandfather, a WW II veteran, wept when he learned everything, including the small home he inherited from his brother, was gone. Thankfully, MN has now been forced to follow federal law. Florida has been following federal law for many years.

That experience shaped the way I practice law. In nearly 30 years, I have helped hundreds of families protect their homes, their savings, and their peace of mind — even when the diagnosis had already arrived. I have also sat across from families where it was too late to do everything we could have done earlier.

I do not want that to be your family's story.

The families who come to us early — even after a diagnosis, even when they think it might be too late — almost always have more options than they expected. The families who wait rarely do.

If your parent has been diagnosed with dementia and does not have a complete, professionally prepared legal plan in place, please call us today to schedule a consultation at (941) 909-4644 for our Florida office or at (763) 420-5087 for our Minnetonka, Minnesota office. Or you can fill out the contact form on this page and a member of our team will reach out to you to you to schedule. Not for us. For your family.

If you would like to discover more, here are two additional resources for you:

FREE GUIDE: Download "Save Our Home: How to Protect Your Home and Life Savings From Long-Term Care and Nursing Home Costs"

Written by Chuck Roulet, Elder Law Attorney | Licensed in Florida and Minnesota

This free guide reveals the legal strategies I use with my private clients to protect their home and savings from long-term care costs — including Medicaid planning strategies most families never hear about until it's too late.

Click here to download your free copy now.

Share this with your parents and every sibling in your family.

FREE ONLINE MASTERCLASS: Planning Strategies to Protect Your Home and Savings From Nursing Home Costs

Chuck Roulet reveals the same sophisticated strategies he uses with his private clients to help them protect their home and savings from nursing home costs.

Click here to register for the free masterclass now.

FREE ONLINE MASTERCLASS: Estate Planning Strategies to Avoid Probate, Save Taxes, and Protect Your Family's Wealth

Chuck Roulet reveals the same sophisticated strategies he uses with his private clients — including how to protect the money you leave for your children from divorce, creditors, and lawsuits.