Dementia: More Than Just a Family Matter
According to the Alzheimer’s Association, an estimated 5.4 million Americans suffer from Alzheimer’s disease, a form of dementia. This includes 5.2 million people over age 65, most of whom are women. That’s roughly one in eight older Americans, and about one half of all those over age 85. I’m not trying to scare you, but as we live longer, the chances of developing a degenerative illness like Alzheimer’s, dementia or Parkinson’s increase.
These ailments carry a whole host of complications beyond the stereotypical memory loss. They can result in changes in personality and loss of judgment, orientation and understanding. Dementia also causes considerable stress and strain on family members and other caregivers. Another symptom can be problems with money and personal finances. Besides simply forgetting to pay bills, older people with diminished cognitive function can be an easy target for scams, hard sales pitches and identity theft. They may also be prone to poor or out-of-character decisions regarding savings or investments.
Degenerative illnesses like these are family tragedies that unfold slowly, and are often compounded by confusion and denial. The more planning you do in advance, the better prepared your loved ones will be. Ideally, incapacity planning is addressed early on as part of a full estate planning process before someone becomes ill. Once stricken, someone suffering from these ailments may be unable to understand complex planning needs or be able to express their wishes in proper detail. If there is no plan, family members grasp at responsibilities – or shirk them – without any idea of what the person would really want.
Here are some key points to consider as you prepare yourself or a loved one for incapacity:
Remember that you have help. Far too many people suffer dementia alone, or withdraw as a family unit into themselves, either through denial or a fear of losing control or independence. You will need help with even the most mundane tasks, like getting to the grocery store, so this withdrawal actually makes it more likely to worsen the health situation for both the person with the illness and his or her caregiver. It also makes you far more likely to be a victim of frauds or scams. First and foremost, ask for help.
Choose people you trust to make decisions for you. It’s not fun to imagine yourself or someone you care for in the state dementia brings, but it’s important to consider trigger points where trusted people could step in to help you. You should have pre-selected individuals to act as an executor or agents for health and financial matters. These trusted friends, family or advisors would be responsible for paying bills and executing your wishes under circumstances that you pre-define.
How will major assets be used to pay for care? If an elderly relative becomes irreversibly incapacitated, you will need to review the assets that are available to cover medical and household expenses. This can include savings, investments, and even home equity. Since the home is both a major asset and an emotional focal point, it’s best to get good advice and spell out specifically what you want done with your property and under what conditions. And be very mindful of the costs; some investments like real estate or limited partnerships can be very difficult or expensive to liquidate. If you are concerned about needing to access an investment in the near future, be careful about locking it up in contracts with significant surrender charges (like annuities).
Pick the right experts. Your team should consist of an estate planning attorney, a geriatric care specialist and a trained financial expert such as a Certified Financial Planner ™ professional. You may also want to consult an insurance specialist. Your advisors should have significant experience working with seniors and be prepared to interact with the other members of your team.
Put it in writing. Once you’ve established the team and your plan, then you should have your instructions written into a formal estate plan with the necessary powers of attorney, wills, trust, etc.
Bringing in trusted family, friends and advisors to help you and your loved ones cope with dementia improves the chance that you will live a healthy, independent life.
This column is prepared by Rick Brooks, CFA, CFP®. Rick is Vice President for Investment Management with Blankinship & Foster, LLC, a wealth advisory firm specializing in comprehensive financial planning and investment management. Rick can be reached at (858) 755-5166, or by email at brooks@bfadvisers.com. Rick and his family live in Mission Hills.
Category: Business, Local News
