Diminished Capacity and Financial Well-Being

Diminished capacity of a loved one is a multi-faceted issue. There are practical, emotional, safety and certainly financial impacts.

Changes are often subtle but may still be evident to family or even non-family members. Clues to a decline in a person’s ability to manage their finances can include the following:

  • Inability to maintain and balance a checkbook, beyond occasional mistakes.
  • Difficulty with bill paying, where this activity was managed independently and smoothly beforehand– for example paying bills with a check that have been set up on auto-pay and where the statements are clearly marked as such.
  • Making poor financial judgments or a change in financial behavior, such as large unusual purchases, giving money to a new charity or giving money to a caregiver.

If you notice behavior such as this, it may be appropriate for a family member to discuss their observations with the loved one, the individual’s physician or attend a doctor appointment with the individual so a qualified healthcare provider can evaluate the situation. There can be other reasons for short term memory loss than dementia.

Some advisors, like HTG, ask clients to specify a family member, professional or trusted friend who can be contacted in an emergency, including a significant behavioral change such as diminished capacity.

When you notice early signs of diminished capacity, there are steps your family can take to assist your loved one with their financial well-being.

  • Discuss and evaluate available care options, costs and the individual’s preferences.
  • Identify your trusted advisor(s), both family and professional.
  • Consider completing a financial plan with a professional advisor to project increasing levels of in-home and/or continuing care facility costs and having assets professionally managed.
  • Work with the advisory team to simplify your loved one’s financial affairs. Everything should be inventoried (accounts, assets, insurance, assets and important documents). Put the information in one secure place.
  • Be sure that beneficiary designations are in line with your loved one’s wishes.
  • Check with your loved one’s attorney to be sure their estate plan is up to date and that appropriate powers of attorney and health care proxies are in place. Changes and amendments typically must be made before an individual is incapacitated and are easier if an individual is voluntarily requesting them.

Being organized financially will likely mean less stress for all and more time for your loved one to enjoy family, hobbies and interests while they are able.

Starting early and laying a good foundation will help in the long-run. If you are concerned about diminished capacity, please feel free to contact us for additional resources.

Valerie Connolly, CFA

Valerie joined HTG in 2011 as a senior advisor. Drawing on 30 years of experience in financial services, she greatly enjoys collaborating with clients to shape their financial aspirations. Valerie takes a lead role in developing client investment plans, researching investment vehicles and developing firm-wide investment policy.

Valerie received a BA from Wellesley College and an MBA from University of Chicago. She is a CFA® charterholder and a member of the CFA Institute and CFA Society Stamford.
The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.
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