Having recently lost my father to complications from COVID-19 and dementia, I am drawn to the subject of diminished capacity, which, as I learned firsthand, can create a multitude of challenges from the practical to the emotional, from safety to financial. While all are important to consider, the focus here is on the financial challenges.
When cognition slips, financial skills are often the first to go. Seniors with diminished capacity are prone to making financial mistakes, and with today’s technological advances, they are especially vulnerable to financial exploitation by scammers who often target older adults.
If you are fortunate enough to be near your loved one, you may have the benefit of observing cognitive changes firsthand, as I did when my dad’s dementia started to take hold. Always fiercely independent, he would never ask for help. I treaded lightly at first and, with his permission, observed his bill paying and checkbook management processes. This eventually led to my taking over – much to his relief (and my surprise). You know your loved ones best and can adjust your approach. Coming from a place of love and caring is essential. If you don’t live near your loved one or don’t feel you can handle the responsibilities, find someone who can step in and help out. Regardless of your proximity or level of involvement, it’s crucial to be able to identify when financial management skills start to decline:
Recognize the Signs
Understanding how to recognize diminished financial capacity in an aging parent, spouse, or other loved one is critical in safeguarding their assets and ensuring their financial security. Changes are often subtle but may still be evident to family members or non-family, and may include the following:
- Forgetting to pay bills or deposit checks, or duplicating bill payments.
- Inability to maintain and balance a checkbook, beyond occasional mistakes.
- Difficulty with bill paying, where this activity had been managed independently and smoothly beforehand– for example, paying bills with a check even though the bills have been set up on autopay.
- Making poor financial judgments or changes in financial behavior, such as large, unusual purchases, giving money to a new charity or giving money to a caregiver.
Be proactive
If you observe any of these or similar red flags, take steps immediately to stem any damage that could result.
Taking a proactive approach to financial care for your aging or infirmed family member is key. Ideally, you and your loved ones have done some advanced planning and have a financial and legal plan in place in the event of a health decline.
If advanced planning has not been done, it is not too late. Here are some action steps:
- Familiarize yourself with your loved one’s finances: what bills they have, how they pay them, where they bank, and where their investment accounts are. Have yourself or someone you trust added to the checking account for ease of managing bill paying.
- Record and/or share digital credentials (usernames and passwords), for continued access to important accounts if your loved one becomes unable to manage them.
- Organize important documents. Ensure that financial documents such as wills, trusts, and powers of attorney are current and accessible.
- Communicate openly. Have regular conversations about financial matters, including alerting them to common scams that target seniors.
- Collaborate with professionals. Work with a trusted financial advisor, geriatric care manager, or attorney to protect financial assets and put safeguards in place.
- Designate a trusted contact for bank and investment accounts. This person may be contacted if the account holder is unreachable or if suspicious activity is noted, but they cannot initiate account transactions.
- Be vigilant. Keep an eye on your loved one’s financial activities and watch for changes in spending or suspicious transactions.
It can be challenging and feel intrusive to insert yourself into your loved one’s finances. Do it anyway, or, if not you personally, then enlist the assistance of a trusted person who can help.
Planning for eventual diminished capacity, illness, or death can feel daunting and scary. However, the longer you delay acting, the more likely you will be to hit a crisis in the future for which you are not prepared. We find that tackling a few tasks at a time can be an effective way to ease into the process. Every action you take helps set you and your loved ones up for an easier financial transition if it is needed.
There are many resources dedicated to supporting seniors and their caregivers on a variety of levels, including:
https://www.nia.nih.gov/health/legal-and-financial-planning/managing-money-problems-people-dementia
https://consumer.ftc.gov/scams
https://www.consumerfinance.gov/consumer-tools/educator-tools/resources-for-older-adults/