We talk often about the devastating effects dementia has on the people it afflicts. How it destroys intimate relationships, robs sufferers of their autonomy, and annihilates their very sense of self. But one important aspect of this struggle that we may not discuss enough, is how it affects a patient’s financial health.
And we’re not talking here about the high cost of memory care or other health related expenses. Those are voluminous and deserve their own attention. Instead, we’re talking about how dementia and other brain wasting diseases affect an individual’s ability to manage their own day-to-day financial life.
Think about it. Successfully managing your personal finances requires constant attention, careful planning, and daily decision-making. These are precisely the high-level brain functions that dementia inhibits. So if someone you love has received a dementia diagnosis, how do you protect their finances from those who might take advantage of their diminished capacity? Or perhaps more importantly, how do you protect them from themselves?
First, Spot the Personal Finance Trouble Spots
These money-management problems can manifest themselves early in the course of the disease, or even before an official diagnosis. So if you have an aging parent or partner, you should learn to watch out for the signs of impending trouble.
For instance, are they leaving important bills unopened? Have they recently paid bills late or forgot to pay them altogether? Have you noticed any out-of-the ordinary or uncharacteristically extravagant purchases? Are there a large number of unexplained bank withdrawals? These are all good signs that it may be time to take a closer look at your loved one’s finances.
Have the Tough Talk
Now personal finances can be a very touchy subject, so it’s important to approach your loved one with lots of care and understanding. But it’s also important to act early, so you can avoid a financial crisis before it happens.
This step might take a while, and it may require a bit of negotiation along the way. But throughout the process, remind your loved one that you’re acting in their best interest.
Handle Legal Matters
If you’re concerned about a loved-one’s ability to manage their own finances – especially in light of a dementia diagnosis – it’s important to get their legal affairs in order. An elder law attorney can help you choose what arrangement best fits the situation, but your options might include:
- Appoint a Durable Power of Attorney: These individuals have the authority to make financial decision for another person.
- Establish a Revocable Trust: This puts someone else in charge of the patient’s assets. Under this arrangement, the person with dementia would need to confer with the trustee before making large purchases.
- Set Up a Conservatorship: Here, a judge must agree that the person is incapacitated or unable to manage their own affairs. They would then appoint a conservator who would then take over the checkbook. This option is typically a last resort, because it strips the dementia patient of all control over their financial affairs.
These legal arrangements serve dual purposes. Not only do they protect the patient against themselves, it also establishes a legal framework you can work within as you help your loved one manage their financial life.
More Tips to Come
Taking responsibility for your loved one’s finances is a huge responsibility and shouldn’t be taken lightly. In our next post we’ll provide a few strategies you can use to make sure your loved one is taken care of, while still offering them a bit financial independence.