Estate Planning for People With Dementia in California

Estate planning for people with dementia can be one of the most difficult and emotionally charged situations families face. By the time many families realize planning is needed, it may already be too late.

A common question I hear is this. My parents have dementia now and can no longer set up a trust. Does that mean everything has to go through probate?

In some cases, the answer is yes.

Dementia can affect legal capacity, and once capacity is lost, the ability to create or change an estate plan often disappears with it. Understanding how capacity works in California and why timing matters can help families avoid devastating outcomes.

Why Dementia Changes Things in Estate Planning

Estate planning depends on capacity. In California, a person must understand what they are doing in order to create or change legal documents.

This includes understanding:

• What assets they own
• Who their family members are
• What a trust or will does
• Who will benefit from their estate

If a person lacks this understanding, they cannot legally create or amend an estate plan. California Probate Code Capacity Standards

Dementia exists on a spectrum. Some individuals may have mild cognitive impairment. Others may have advanced dementia. The challenge is that capacity is not based on diagnosis alone, but on the individual’s ability to understand and make decisions at the time documents are signed.

Testamentary Capacity Explained

In California, creating a will or trust requires testamentary capacity.

This means the person must understand:

• The nature of the document
• The nature of their property
• The natural objects of their bounty (who their kids are)
• How the document distributes assets

If a person does not meet this standard, any estate plan created can later be challenged and potentially invalidated. California Courts Capacity and Conservatorship

This is why estate planning should never be delayed when early cognitive decline is suspected.

What Happens If a Trust Was Never Created

If a person with severe dementia never created a living trust and no valid power of attorney exists, their assets are usually stuck. Real estate held in their individual name must go through probate when they pass away. Financial institutions may freeze accounts. Family members cannot step in automatically. Why Californians still end up in probate

Probate in California commonly takes 12 to 24 months and is based on the gross value of the estate.

Why Power of Attorney Is Not a Substitute for Capacity

Many families assume a power of attorney solves everything. Unfortunately, that is not always true.

A power of attorney must be signed while the person still has capacity. If dementia has progressed too far, a power of attorney cannot be created.

Even when a power of attorney exists, it does not allow the agent to create a trust if one was never established, unless the power explicitly grants that authority and capacity existed at signing.

Related link:
Essential estate planning documents

Can Someone With Dementia Still Create a Trust

Sometimes, yes. Sometimes, no.

If the person still understands what a trust is, what assets they own, and who should benefit, they may still have capacity.

This is often evaluated with the help of:

• A detailed attorney interview
• Medical records
• Sometimes a physician evaluation

Timing is critical. Waiting too long can permanently eliminate the opportunity.

The Consequences of Waiting Too Long

When planning is delayed and capacity is lost, families are often left with limited and expensive options.

These may include:

• Probate after death
• Court supervised conservatorship during life
• Litigation among family members

Conservatorship proceedings are intrusive, expensive, and time consuming. They require court approval for major decisions and ongoing reporting.

Why Probate Becomes Likely Without Planning

Without a trust or proper beneficiary designations, California law dictates how assets pass. Probate vs trust in California

Even modest estates can trigger probate. Real estate almost always does.

For families already coping with dementia, probate adds unnecessary stress, cost, and delay.

How Early Planning Protects Aging Parents

Encouraging parents to plan early is one of the greatest gifts adult children can give.

Early planning allows parents to:

• Choose who manages their affairs
• Avoid court involvement
• Protect privacy
• Ensure assets pass smoothly
• Reduce family conflict

Read more:
How to keep your estate plan safe

Addressing the Emotional Resistance to Planning

Many parents resist estate planning because it forces them to confront aging and mortality. Dementia makes these conversations even harder.

Approaching the topic as a matter of protection rather than control can help. Estate planning preserves independence rather than taking it away.

What Families Should Do Right Now

If a parent is showing early signs of dementia:

• Do not wait
• Consult an estate planning attorney immediately
• Review existing documents
• Confirm capacity before changes are made

Time matters more than perfection in these situations. 

Read more: How to find a good estate planning lawyer

Key Takeaways

• Dementia directly impacts legal capacity
• Estate planning must be done before capacity is lost
• A diagnosis alone does not determine capacity
• Waiting too long often leads to probate or conservatorship
• Powers of attorney must be signed early
• Living trusts cannot be created after capacity is gone
• Early planning protects families from court involvement

Frequently Asked Questions

Can someone with dementia still sign a trust?

Only if they understand what they are signing at that moment.

Does dementia automatically invalidate an estate plan?

No. Capacity is evaluated at the time documents are signed.

What happens if my parent cannot create a trust?

Their estate will likely go through probate.

Can a power of attorney create a trust later?

Only in limited situations and only if capacity existed when signed.

Should families wait for a formal diagnosis?

No. Planning should begin at the first signs of cognitive decline.

Final Thoughts

Estate planning and dementia do not mix well with delay. Once capacity is lost, options shrink dramatically and court involvement becomes far more likely.

Families who act early preserve dignity, independence, and peace of mind. Families who wait often face probate, conservatorship, and conflict.

Encouraging aging parents to plan early is not about taking control. It is about protecting them and the family they love.

Schedule your free 30-minute Strategy Session today or call (949) 377-2996 with Michael Pevney, your trusted Orange County estate planning attorney.