One of the first signs of seniors losing cognitive skills, is an inability to handle their personal finances. For spouses, partners or adult children who must step in, this presents a number of legal, as well as emotional, issues.
As with so many other elements of estate planning, preparing in advance to take over financial management for a loved one or parent with Alzheimer’s or other form of dementia can make a big difference for the family, as advised by Forbes in “Managing Finances For A Loved One With Dementia.”
Fortunately, there are steps to take in advance that may help make things easier. Consider the following pre-planning steps, best implemented before you or your loved one are diagnosed with dementia:
- Drafting a power of attorney can allow a trusted person to make your financial decisions when you are no longer able.
- Purchasing long-term care insurance, if possible, can defray some of the high costs of care.
- Drafting a health directive describing the kinds of medical actions to be taken in the event your loved one can no longer make decisions on their own can help ensure your wishes are carried out.
Managing finances for a loved one with dementia can be very difficult. Nobody relishes the thought of gathering around the dinner table, talking about the risk of dementia. But with average life expectancy on the rise, the chances are too high to ignore this problem.
The Aging, Demographics, and Memory Study by the National Institute on Aging found that 14% of Americans age 71 and older have some form of dementia. The Chicago Health and Aging Project estimates that nearly one-third of people 85 and older have Alzheimer’s. However, the real issue is that too few families will discuss the topic of managing money and deteriorating faculties with age. Only 25% of families surveyed discussed how their parents will be financially provided for, or cared for, as they get older, according to a 2014 study by Merrill Lynch.
When looking at people 50 and over, the survey noted that about 50% of those surveyed didn’t have a will, and only 40% had a health care directive.
No one can predict when or if a person will develop dementia or a related condition. For that reason alone, putting an estate plan in place that includes the possibility of someone else making financial and medical decisions on your behalf is very important. This allows a family member or caregiver to carry out your wishes and to protect your quality of life.
Reference: Forbes (October 31, 2017) “Managing Finances For A Loved One With Dementia”