Knowing a loved one is going through cognitive decline is a difficult situation on its own made even more challenging when you consider how it will affect their finances. Problems related to money management, from unpaid bills and abnormal spending to confusion over their accounts and missing money, are often one of the first indicators that something is amiss. Fortunately, if your loved one is heading towards a dementia diagnosis of some kind or has already received one, there are steps you can take to protect their financial assets and ensure they’re properly taken care of when they’re no longer able to care for themselves.
- Having the Conversation
Even when it’s necessary, speaking with your relatives about their financial situation can be an uncomfortable experience for everyone involved. After all, they’ve likely been managing their own cash flow for decades and opening a dialogue may feel like an unwelcome role reversal. However, it’s of vital importance that those with cognitive impairments have the support they need as early as possible. In order to maintain their standard of living they must ensure bills are paid, keep accounts in good standing, and avoid any potential scams, all of which become more difficult over time. The Center for Retirement Research found that 80% of people with a dementia diagnosis are incapable of managing their own finances.
You know your loved ones best, so be sure to consider their personality, state of mind, and the timing when you initiate the conversation. Expect that you may encounter denial or suspicion when you start asking about how they’re doing with managing their finances. Don’t be discouraged if they’re reluctant to engage with you. Try to frame the conversation in a positive light by reassuring them that you’re on their side. It may be proactive to begin by simply offering your time and emphasizing that you just want to assist them in protecting their assets. If you think they’d respond better to an objective third party, consider including a financial advisor or elder law attorney.
- Getting Organized
When it comes to helping your loved one manage their finances, you’ll want to get organized and ensure you have the legal authority to handle their affairs. First, figure out where they keep their financial documents, so you can know the full scope of their situation and be able to work with them on the best course of action. Perhaps they have a filing cabinet with all of their information or maybe they store it digitally. Consider their bank and brokerage accounts, mortgage statements, insurance policies, monthly bills, Social Security payments, and other retirement benefits. Once you have a handle on the entirety of their financial situation it will be easier to guide them through setting up automatic bill payments, consolidating accounts, or filing benefit claims.
You’ll also want to consider having a power of attorney document drafted by an attorney to give you the right to oversee their financial decisions. This needs to be set up as soon as possible because the signer must be mentally competent to approve the document; otherwise, you’ll need to go to court to have a judge decide if someone else should be managing your loved one’s finances. With a financial power of attorney in place you can proceed with handling more complex matters such as being added to their bank accounts, negotiating with creditors, and making investment decisions. Most banks and other financial institutions can’t give you any information about, nor authority over, another person’s finances, even if you’re related, until you can provide legal documentation.
- Putting a Team Together
If your parent or loved one has a CPA and/or financial advisor already, it may be beneficial to suggest that you all have a meeting together. Professionals like these can be valuable allies in helping you protect your loved one’s assets and understand their long-term care options. From ensuring accounts are invested properly to making sure taxes are paid and filed timely, it’s a wise idea to involve experts when you’re working with finances, especially if they’re complex or unfamiliar to you.
Financial advisors can also facilitate the process of adding a power of attorney to investment and retirement accounts at different financial institutions or even transitioning to a successor trustee if a trust account is involved. Some institutions only require the legal documents themselves but usually have their own forms for you to sign attesting to your right to oversee the accounts.
It may be necessary to contact an insurance professional if your loved one purchased Long-Term Care Insurance prior to their diagnosis or if you need to evaluate the best health insurance option. There are a lot of plans available on the market, but some can have restrictions for the memory care they’ll offer, so it’s important to thoroughly understand the fine print of each plan.
- Programs and Services
There are a variety of programs and services available to aid with the care and expenses associated with a dementia diagnosis, some are nationwide and others are state-specific. Those with Early-Onset Alzheimer’s may be eligible for Social Security Disability Insurance and Supplemental Security Income. For people with low incomes or a small amount of assets, Medicaid can be an option to cover the cost of health care and assisted-living or nursing homes if an individual has exhausted their ability to pay on their own. Veterans’ benefits may be another option for people who have served. For those 65 and older, Medicare is the main form of health care coverage; it provides coverage related to certain in-home health care, inpatient hospital stays, limited nursing home care for short-term stays, and hospice care. You can reach out to your state’s Health Insurance Assistance program for personalized advice in navigating Medicare and making decisions for your loved ones.
Many foundations focused on dementia and Alzheimer’s patients have lists of resources on their websites or employees who can direct you to local assistance or walk you through the process for applying for different aid programs. Hiring a Professional Geriatric Care Manager may be a positive way to facilitate conversation between you and a loved one who is unwilling to accept support.
Helping a loved one in cognitive decline with their finances while also setting up care can feel confusing and overwhelming, but there are professionals and programs available to assist you and provide information to make the process easier. Even if you don’t receive the response you’d like when you first offer your support, keep trying to work with your loved one because the sooner you can put financial protections in place, the better. It may require a delicate approach over time or a more serious conversation with professionals present, so don’t give up if your first attempt isn’t well received and be sure to consult your trusted Financial Advisor and Estate Planning Attorney along the way.