If a person close to you has been diagnosed with Alzheimer’s disease, it may be time to address some serious financial questions. It is wise to get financial matters in order as soon as possible due to the debilitating nature of Alzheimer’s and other forms of dementia that affect your loved one’s ability to make sound decisions.
Here are four important steps to take:
1) Look for signs of unusual financial activity
Discrepancies involving money can often be among the early signs of cognitive challenges for an individual. Red flags may include difficulty paying a proper amount for an item, leaving bills unpaid or making out-of-the-ordinary purchases. If you observe signs of a loss in judgment related to financial matters, additional action may be required.
2) Identify and designate a power of attorney
Many people are reluctant to hand over control of their personal finances. It’s important to have an honest discussion with your loved one and help them appreciate the importance of having someone look out for their interests.
It is important to identify a trusted surrogate to help manage day-to-day money matters when that becomes necessary. The individual should be designated as the financial power-of-attorney, authorized to sign checks, pay bills and help keep an eye on the affected person’s finances. The power-of-attorney designee can ease into the role, only assuming full control when it becomes absolutely necessary as the person receiving the diagnosis loses capacity to make rational decisions.
3) Make sure proper documentation is in place
An individual needs to be considered competent to complete or update legal paperwork such as wills, trusts and other estate planning documents. This should include an advanced health care directive that will indicate the levels of care that should be provided if health deteriorates. Also check beneficiary designations on any retirement and financial accounts, as well as life insurance policies. With all relevant documentation, be sure the information and named beneficiaries are up to date and that proper processes are followed. Check with an estate planning attorney for help.
4) Assess costs of care and how it will be covered
A top priority is to determine a strategy for how your loved one will be cared for, particularly if his or her cognitive abilities should deteriorate over time. Will specialized care be required, either in the home, or in a nursing or assisted living facility? If so, are there resources or long-term care insurance policies in place to help deal with those costs? This will greatly affect any decisions regarding a care strategy. Talk to an elder law attorney about trusts that can be established to provide for care for the disabled individual while still protecting the family’s assets.
Be proactive in your approach
Waiting too long to address financial considerations after an Alzheimer’s diagnosis can exacerbate an already stressful and emotional time. Take steps to get on top of the situation as soon as you become aware of an impending problem. Keep in mind that establishing a plan for addressing these issues even before a form of dementia is firmly diagnosed also makes sense.
Consult with your financial advisor for guidance on how to manage these challenging times.
MICHAEL W. K. YEE, CFP,® CFS,® CLTC, CRPC®
1585 Kapiolani Blvd., Ste. 1100, Honolulu, HI 96814
808-952-1222, ext. 1240 | michael.w.yee@ampf.com
Michael W. K. Yee, CFP,® CFS,® CLTC, CRPC,® is a Private Wealth Advisor, Certified Financial Planner™ practitioner with Ameriprise Financial Services Inc. in Honolulu, Hawai‘i. He specializes in fee-based financial planning and asset management strategies, and has been in practice for 36 years.
Investment products are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value. Investment advisory products and services are made available through Ameriprise Financial Services LLC., a registered investment advisor.
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