Cognitive decline is a sad condition that many families are challenged by, and our hearts go out to all those affected. If you or a loved one are experiencing this, here are some things you can do that will help make the task of managing your finances easier despite the obstacles that prevail.
Know the warning signs
Cognitive decline is also known as dementia. It is characterized by a decline in thinking and memory function. It tends to onset gradually over a period of years. It can make it easier on the family if you can recognize the warning signs early on, and take measures to lessen the strain on everyone involved, including both the affected person and the caretaker. These signs include loss of short term memory, asking the same question repeatedly, confusion, changes in sleep or mood, and difficulty in completing routine tasks.
It’s useful to look for diminished capacity. These are conditions like loss of hearing or eyesight, and they may or may not be linked to cognitive decline. However, certain accommodations can be helpful in these cases as well.
Be prepared
If a loved one has dementia, you may have to take an elevated role as their caretaker. It is best to get the essentials in place before cognitive decline takes hold fully. This is because in some cases, you may be unable to make legal arrangements once the person is in a state of cognitive decline. These essentials include the establishment of a will, trust, or power of attorney. It is best practice to have these estate planning documents in place regardless of whether or not dementia comes into play. All families should meet with an attorney and put the paperwork in place well in advance of the time when cognitive decline may be likely to occur.
Know your options
Dementia is progressive in onset and the degree to which the caretaker gets involved will vary in accordance. At first, you may just have to be present at meetings in which their finances are discussed (meeting with their CPA or financial advisor, for example.) When dementia is in its early stages, the caretaker’s role is mostly to keep a watchful eye on the loved one’s finances.
As things progress however you may have to take a more active role, such as being appointed a trusted contact on their accounts. A trusted contact steps in when you need to be reached but can not be due to natural disaster, travel, etc. There should be two or more trusted contacts appointed.
In the most extreme case, you would need a Power of Attorney in order to gain full control of their financial affairs and make decisions regarding their accounts.
Minimize external risks
The unfortunate reality is that people with cognitive decline are often preyed upon by unscrupulous people looking to take advantage of them. They are disproportionately victims of financial fraud. Take measures as soon as possible to put barriers in place to protect your loved one’s private information. Limit who has access to this information, put them on the National Do Not Call Registry, and take measures to protect them from online fraudsters.
It is also useful to evaluate who should and should not be included in their inner circle when it comes to discussing financial matters. The sad reality is that many times, people are taken advantage of by folks who are familiar to them.
Coordinate eldercare resources
Caregivers should also coordinate resources such as any long-term care insurance and/or government benefits. It is a good idea to consult with an elder law attorney who can help you put documentation in place regarding guardianship, asset protection, incapacity planning, and establishment of legal arrangements such as a will, trust, or healthcare proxy. The National Academy of Elder Law Attorneys is a useful resource.
Exercise self-care
It can be hard mentally to take care of someone in cognitive decline. Sometimes the loved one can exist in an agreeable state, and in other times the person may become suspicious and paranoid. Make sure you have the appropriate resources supporting you and your mental health, as this is no easy emotional undertaking for the caretaker.
As financial advisors, we are advocates for you and your family as you navigate challenging circumstances. If you or your family wish to discuss how to manage a situation like this, please reach out and we will be glad to speak.
-Judd
Sources
AARP, Financial Planning Association. A Financial Professional’s Guide to Working With Older Clients. https://www.aarp.org/content/dam/aarp/money/how_to_guides/2011-08/Financial%20Professional%20Guide%20Working%20Older.pdf