This month I’d like to pay tribute to my friend Edith, who recently passed away after developing Alzheimer’s many years ago. She’s been a long time family friend, and will be dearly missed.
As long-time readers will recall, I grew up in a small town in a rural area near the base of the Bruce Peninsula. My parents were originally from northern Ontario and had met while working for Ontario Hydro in a remote hydroelectric camp. Shortly before I was born, they took an opportunity to move to southern Ontario, as my dad was transferred to work at the Bruce Nuclear Power Development (which was being built at the time) along the shores of Lake Huron, and my mom took a job in a nearby town as an elementary school teacher.
When we were kids, my sister and I used to joke that dad’s exposure to the nuclear plant had clearly affected our DNA, and was the only possible explanation for our weird and warped senses of humour. As one of the driving economic engines of the economy in the area, it was pretty hard to find anyone without a connection to the nuclear station.
As much as we joked in our house about the nuclear plant changing our genetics, looking back, many wonderful opportunities and aspects of my life are owed to my dad’s employment. The greatest of these gifts, however, was the opportunity to have met two of my dearest friends, Andrea and Kate. My dad used to work for their dad, Dave, at the station. We first met when Andrea and I were probably around 8 years old, at a backyard barbeque that Dave threw for some work colleagues. We’ve all remained close for many years, with easy friendships that can effortlessly pick up after long absences as if we never parted. I like to think I’ve become their unofficially adopted somewhat annoying, but still funny brother.
The girls and I have been there for each other through thick and thin, and they were both a huge comfort and support for me when my mom passed away after a lengthy bout of cancer. In fact just a few days after my mom died, Kate and I were presenting a training workshop together on storytelling for charities. I have no idea how we made it through that workshop without me falling to pieces, other than Kate helping me hold myself together in the moment, and Andrea (who now lives in Winnipeg), checking in on me over the phone when I needed to talk.
Our lives have recently come full circle. Kate and Andrea called me a few days ago to let me know that Edith, their mom had passed exactly one week after the anniversary of my own mom’s death. Our lives continue to be intertwined, and I am doing anything I possibly can to help them and their dad out. We are family, after all.
Growing up and spending time at their house, I got to know Edith really well. Edith was a smart, kind, sweet-tempered and lovely person, who enthusiastically welcomed me every time I showed up on the doorstep with a huge smile, and usually some kind of amazingly tasty cookie or snack. An occupational nurse, I can remember having many fascinating conversations with her over the years about her area of expertise, especially while she was working her Master’s degree in Nursing at the University of Michigan, the same school where I studied for my Master’s as well, a few years before she completed hers.
As Edith approached her sixties, however, it started to become clear that something was amiss. Edith’s memory and capacity began to slip, until eventually she was diagnosed with a form of early-onset Alzheimer’s. At first it was manageable, but as any family affected by Alzheimer’s can attest, it is an extremely difficult and tricky disease. A few years back, Edith moved into a Long-Term care facility, as she required round-the-clock supervision and care. On my last visit (which was prior to the pandemic), despite the difficulties of communication as her disease progressed, Edith was still her sweet, happy and warm self, despite the impact of the Alzheimer’s. I don’t know if she remembered me or not, but it was lovely to spend some time with her. Alzheimer’s is a particularly cruel disease in that the patient is happy and oblivious to their situation, but for family and friends, we must mourn the incremental loss with each visit.
The topic of capacity has been on my mind over the last two months, even before receiving news of Edit h’s passing, so this month it seemed like a signal to talk about one of the trickiest parts of Alzheimer’s and other dementias: the gradual loss of capacity.
Financial and estate planning when capacity is an issue
In the last few weeks, I’ve found myself working on multiple cases where a family member is affected by dementia. There are all kinds of implications that arise in this situation. As planners, sometimes we have to make a difficult decision to determine if our client is capable of providing instructions on their financial affairs or provided consent on transactions or other decisions.
Capacity, legally, is a “moment-in-time” issue. It is entirely possible for someone to have capacity to make financial and estate decisions at 10am, but no longer have that capacity by the time lunch rolls around. As professionals, we take care to document the heck out of any and all conversations in this situation, to establish why we were or weren’t comfortable taking direction at that specific point in time.
Even trickier are the times when we are the first ones to notice or suspect a cognitive decline in a client, but they still seem to have decision making capacity. I have found that in the earliest stages of dementia, both the patient, and their family may not be aware of an issue. However, as a financial planner, I may notice something concerning, as I am not usually interacting with the client on a daily basis, and often our discussions can be more technical in nature than those normally held in a household.
The issues may even go beyond concerns about capacity or cognitive decline – I once had a conversation with a client where the client was clearly exhibiting slurred speech and signs consistent with a stroke. Thankfully, the client was able to call their daughter to take them to the hospital, and it turned out to just be a reaction to some new medication.
Private conversations with a client exhibiting a cognitive impairment or out-of-character behaviours can often be the most stressful situations, in my opinion. Legally, due to privacy laws, I am unable to relay my concerns to the client’s family or friends, unless I am aware of imminent physical harm to them or someone else. Fortunately, as of January 1, 2022, the investment industry has come up with a solution to this problem. Regulatory authorities have started to require that clients file “Trusted Contact Person Forms” (TCP Forms) with their investment advisor. I think we will see this spread to many other related industries as well in the next few months. It is a brilliant idea.
Who is your trusted contact?
A TCP form is designed to allow you to give legal permission to the person or company holding your investments to notify a trusted contact that you appoint (normally a family member or close friend), in several situations, including those where the advisor may have reason to be concerned that you are acting out of character or in distress. On the TCP Form, you will designate one or two people to whom the advisor may reach out to let them know their concerns. The advisor can’t disclose any financial items to your contact person, but they could outline why they have a concern, and ask that they check in with you to make sure you are OK. This seems to me reasonable and prudent.
I had a case a few years ago where a client was clearly in severe cognitive distress, and I was informed by a law firm that I consulted with that I was legally unable to breach privacy to notify anyone unless there was clear signs of imminent harm to them or another person. Had this form been on file, I could have reached out to the family, but otherwise, my hands were tied.
What happens to our estate plans if capacity is lost?
One other significant issue that I have seen arise in the last few months is the difficulty of estate planning when one partner has lost capacity. If, like Edith, you were to develop Alzheimer’s or a similar cognitive impairment, it is important to realize that your estate instructions become “frozen”. Neither your spouse, nor your power of attorney are able to make changes to the terms of your estate. This also holds true to named beneficiaries on insurance, TFSAs, RRSPs, RRIFs, Pensions and other similar accounts.
The ramifications of this can be significant. Normally, spouses’ wills are written in such a way as to synchronize between both partners. If one partner has lost the capacity to update their will, the drafting of an updated will for the unaffected spouse can suddenly become infinitely more difficult, as the timing of the passing of each spouse might result in drastically different allocations of the estate.
Additionally, what happens if a beneficiary of the incapacitated person’s estate is no longer around? Beneficiaries may pre-decease, or charities that may be named may close. Estate taxation rules may change in the future, but the will can’t be updated to reflect smarter tax or estate planning strategies in light of the new situation.
Because of all of the above, I’m a big fan of leaving some flexibility in the wording of your will, in particular for any charitable giving. I love to see fallback clauses in wills that give the estate trustees some flexibility. For example, you could give to Charity A, but put a clause that says if Charity A is unwilling or unable to accept the gift, then the gift goes to Charity B, or the closest similar charity the estate trustee can find.
Flexible estate giving through Donor Advised or Donor Directed accounts
Another interesting solution we have used recently with clients is to use a Community Foundation’s Donor Advised or Donor Directed account structures to make estate gifts. Rather than naming specific charities, in this case our clients have named a Community Foundation as the sole charitable beneficiary of their will, through their Donor Advised program. In their arrangements with the Foundation, at their death, the foundation will receive funds from their estate, which the foundation will then disburse to a list of charities our clients have provided. They have also left instructions that in the event that one or more of them loses capacity prior to their death, the charity may take advice from their children on how to distribute the charitable funds once received. This allows some flexibility, while still ensuring the tax receipt will be useable by the estate.
Not all foundations will allow funds to flow through in this way, so it is important to do your homework, talk to the foundation you are thinking of using, and know their rules and policies. It is always best to get a gift agreement in writing that outlines how you want your gift to eventually flow. It’s also important that you recognize that the Foundation needs some compensation for the work involved on their end. In many situations, this can be handled by the foundation charging a fee to flow the funds, or through allocating a percentage of the gift directly to the foundation for its own use. Either is reasonable in my opinion.
There can be other creative ways to use this type of structure as well. We’ve recently worked with clients who are contemplating creating a new charity, but it will likely take 3-5 years of work still to see if this will happen. Since there is not yet a legal entity for the charity, it is impossible for them to leave funds in their estate at this point in time. Instead, they have left a Community Foundation as the beneficiary of the funds, with arrangements in place that the Foundation will flow those through to the new charity if it exists at their date of death, or, alternatively, to a backup list of charities if it does not. This helps keep their will clean and simple and lets us do the tax planning now. It is a great example of how thoughtful, creative planning can create great outcomes, even if capacity becomes an issue later on.
Cherish the moments
As stressful as it can be to have someone you love affected by dementia or other capacity-limiting conditions, I think it is important to seek out and find the moments to connect with our loved ones.
One of my favourite memories of Edith in her later years, was when Kate, Dave, myself and my dad (who didn’t play, but rode in the cart providing colour commentary!) all went out golfing with Edith, just before she entered Long Term Care. Golf had been one of her hobbies. I’ll never forget her looking quizzically at Kate, Kate gently suggesting which club to use and reminding her mom which direction to hit. . . at which point muscle memory would kick in, and Edith would hit a glorious shot, right towards the pin.
Edith pretty much beat us all that day. Kate would later comment to me that clearly golf was 100% a mental sport – despite (and maybe even perhaps due to) the Alzheimer’s, Edith was playing some of the best golf of her life, perhaps because she couldn’t get hung up on her past shots. I’m quite certain she beat me by at least five shots on the nine holes we played– I certainly don’t recall Dave, Kate or myself enjoying our round of golf nearly as much as Edith appeared to be. I called Andrea a short time later to let her know that her mom had absolutely murdered me on the golf course, and she let out a hearty laugh. It was a great moment of levity, and I’ll cherish it for many years to come.
Many thanks to Dave, Andrea and Kate for allowing me to share my memories of Edith, and our amazing life-long friendship with all of you.