Real Time Web Analytics


Saturday, July 17, 2010

What happens if the beneficiary of an estate has dementia?

I find it interesting to talk to executors of estates when money or valuables are left to an elderly person who has Alzheimer's disease or other dementia. The executors' attitude is sometimes along the lines that the elderly beneficiary won't know or realize that he or she has inherited something, and certainly won't spend it, so why bother giving it to them. The executor then wonders if the elderly beneficiary's gift should be given to someone else who will appreciate it.

This goes completely against logic for me. The elderly person with dementia that prevents him or her from looking after finances is exactly the person I'd think an executor would want to protect.

I've talked in a few posts about the executor's role and the fact that the executor can't simply decide not to pay an inheritance to a beneficiary for his or her own reasons, so I won't discuss that again right now. I would like to talk about the logistics of paying an inheritance to a person with dementia.

Assuming that the beneficiary is elder and that the existence of dementia is not a question, then there is quite likely someone legally appointed to help with their finances. The first thing to look for is whether anyone under is acting under an Enduring Power of Attorney. If so, the executor can send the beneficiary's inheritance to the person acting under the Power of Attorney, to be looked after on behalf of the beneficiary.

If the elderly person with dementia did not appoint anyone under an Enduring Power of Attorney, and is disabled to the point where he or she cannot deal with an inheritance, then it is highly unlikely that he or she can still sign an Enduring Power of Attorney. In this case, the next option is to have someone appointed by the court to act as legal Trustee for the beneficiary.

Trustees are most often family members, but sometimes it happens that the elderly beneficiary will have no relatives available to do this job. Perhaps the person who left the beneficiary the inheritance in question was the last living relative. In that case, a trust company or the Public Trustee could be appointed by the courts as a trustee. The executor is perfectly within his or her rights to make a telephone call to a trust company or the Public Trustee to ask for help in determining whether he or she should pay the inheritance not to the beneficiary but to a representative for the beneficiary.

Many executors in this situation will take the attitude that going through court-appointed trustees is just too much trouble, and will simply write a cheque and deposit it into the elderly beneficiary's bank account. This solves the issue of moving the money out of the estate and into the hands of the beneficiary. However, it doesn't do anything to protect the elderly person who just inherited the money, either from strangers or from other beneficiaries who are aware that the elderly person now has money but can't manage it due to dementia.

If the executor deposits the money and doesn't have a signed Release from a person acting under an Enduring Power of Attorney or court Order, there is a risk. A beneficiary or family member of the elderly beneficiary may later realize that there was an inheritance, and if the money is no longer in the elderly beneficiary's account (either because it was dissipated or because someone scammed it from the elderly person) then the executor is going to be in a tough position. The executor can be held personally liable for a beneficiary's inheritance if he or she can't prove that it was paid to the proper person.

As an executor, take a cautious approach and ask questions as you go. You should have a legal advisor if you are faced with unusual difficulties such as an incapacitated beneficiary, both to protect the beneficiary and to protect yourself.


  1. Hello,
    My parents gave me Power of Attorney. I appointed my deceased brother's friend to be liquidator of the estate. This was because we were in different provinces. That was March, 2004. The executor has given me no information. Properties were sold and I imagine all accounts were closed. Nothing to date. My parents are waiting for this to close. Where can I get information on my brother's estate, since the executor has offered nothing and my family fears the worst. Is there a statute of limitations on such an estate's holdings?

  2. my dad converted his life insurance policy to shares into a Trust company owned by that very same insurance company . The dividend payments that continue to be paid after my dad's passing come from a division of that insurance company. He receives common share dividend payments as does my mother. Together they have 500 shares. He made my mother the beneficiary and all of us kids (4)the contingent beneficiaries. My mother is alive and has some dementia, she resides in an assisted living facility. My brother and i were assigned POA's for my mother's health and property. We've written the company to say she needs the money for the shares deposited to her account for rent payments at the assisted living home where she resides. The Trust Company states that I have to get my brother and sisters to sign off before that can happen. She needs her money.I said send it in her name so I can deposit to her account. They will not send her the monies she is entitled to. My sister and other brother are estranged from the family. My mother is still the living beneficiary named by my father. Why is she not entitled to this money. Help?

    1. If I understand the situation correctly, your mother is the beneficiary of the monthly dividend, and if she passed away, that monthly dividend would then be paid to the 4 children.

      When you refer to "the money for the shares", I am not sure whether you mean the dividends, or that you want the shares cashed in. I assume you mean cashing them in.
      With a valid POA, you can direct where her payments go while she is alive. I can't see any reason why that should not be permitted.

      If, however, you were asking that the shares themselves (the ones belonging to your dad) be cashed in, I can see the problem there. The insurance company is bound by your father's instructions, which are to pay the dividends to the kids if your mother passes away. They wouldn't be able to do that if they had transferred the shares to your mother or sold them,and they'd risk being sued by the kids.



You might also like

Related Posts with Thumbnails