The increasing prevalence of dementia diagnoses, such as Alzheimer’s disease, is affecting more families in America. Family members must confront a wide range of issues, from determining when someone is no longer capable of driving, to identifying suitable care-giving options to managing financial affairs.
Financial matters can become particularly complex. In the ideal situation, there would be time to prepare a strategy in advance and take the appropriate steps to make sure all is in order. Unfortunately, things don’t always work out that way, but any planning that can be done ahead of time can make things a little easier for everyone involved.
Looking for signs
It isn’t unusual for issues related to dementia to first come to light if a person begins to have difficulty managing financial matters. That could mean failing to pay bills on time, losing track of funds coming in and going out, or even making wildly erratic decisions about their money.
As a person’s inability to manage finances becomes more evident, other family members need to approach this issue delicately. The person affected may be hesitant to acknowledge that issues exist, or resent having other adults tell them how to handle his or her money. It is best to frame any help in the context of “lending a hand,” not with the implication of taking control of their financial lives.
One important step that should happen well in advance is to designate a person or persons as “power of attorney.” A general power of attorney gives the designated person the ability to act as principal for another, including opening or closing financial accounts. This function no longer applies after an individual becomes incapacitated. At that point, a person who has already been named durable power of attorney assumes control of financial matters on behalf of the incapacitated individual. This person is committed to working in the interests of the person they represent. By having a durable power of attorney designated in advance, family members won’t need to seek court approval to establish a guardianship over financial affairs.
Planning steps to consider
If a person who is beginning to face issues related to dementia is working with a financial advisor, that professional should be contacted and a meeting can be held to discuss the circumstances. It makes sense to review all financial assets owned by the individual who has memory issues and make sure all are properly titled.
Determine sources of income, including Social Security and pensions, and make sure a structure is in place so that all payments are directed to the right accounts. To the extent that automatic bill paying can be established, that will make things easier for the individual and caregivers.
Insurance is another major thing to think about. Be sure all life, health, long-term care and disability insurance policies are identified and proper beneficiaries are named. Make certain the right coverage is in place to meet the needs of the individual who is sure to require additional medical attention in the years ahead.
Prepare for the costs of care-giving
Careful planning is also needed to prepare for expenses related to ongoing care of an individual who is diagnosed with a form of dementia. Over time, care needs will most likely become more significant. A plan should be put in place, including making arrangements for in-home care or moving to a facility that can provide the necessary level of support as the condition worsens.
These are among the many issues that should be laid out in advance, ideally while a person who faces challenges with dementia is still able to be part of the discussion. If adult children are concerned about issues with their parents, it may be beneficial to get the conversation started soon. Consulting with a financial advisor and an attorney familiar with elder law issues may also be helpful.
Brandon Miller, CFP is a financial consultant at Brio Financial Group, A Private Wealth Advisory Practice of Ameriprise Financial Inc. in San Francisco, specializing in helping LGBT individuals and families plan and achieve their financial goals.
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