By Sabina A. Sewillo CFP®
We know the numbers all too well – 5.8 million Americans living with Alzheimer’s, a figure that is expected to reach 14 million by the year 2050[i]. Furthermore, 16.2 million family members and other unpaid caregivers across the country provided an estimated $233.9 billion in care to those afflicted with Alzheimer’s in 2018[ii].
While a diagnosis often brings a myriad of complex challenges for the entire family, money management is one area that can be easily overlooked. As a certified financial planner, it is part of my job to ensure patients and caregivers alike know how to handle difficult circumstances. Here are a few tips:
Have a conversation: Many families struggle to discuss Alzheimer’s and dementia, even after a diagnosis. Once some of the initial shock wears off, consider having an open and honest family conversation[iii]. Start by discussing short, medium and long-term goals and financial objectives over the next several years. The dialogue should also encompass everything from debt and investment plans to future charitable intentions. Although it is difficult, having a proactive conversation enables the afflicted party to have a more tangible say in their financial future before cognitive decline advances.
Organize and review important documents: Soon after a diagnosis, it is essential that all important legal and financial documents are organized and compiled into one easily accessible location[iv]. Make sure to include usernames, password/pin information as well. Ensure estate plans, beneficiary designations, insurance policies and end-of-life documents are updated and reflective of the current health situation. Tackling these administrative tasks early will help to alleviate some of the financial burden moving forward, while also providing a critical roadmap for caregivers.
Implement safeguards: Alzheimer’s patients are generally more vulnerable to both financial mistakes and fraud. Therefore, it is important to proactively implement some easy safeguards in the early phases. For example, an adult child may be able to help with paying bills or balancing the checkbook. Other common tactics include replacing credit cards with cash and reviewing bank statements and credit reports more often than usual. I generally recommend a measured approach with assistance. That way the afflicted party does not feel as if he or she is losing their independence and dignity all at once.
Establish a takeover plan: Symptoms will eventually progress to a point where once simple financial decisions become impossible and a caregiver will have to assume full control. This is often carried out legally through a durable Power of Attorney (POA), where a person authorizes a third-party (agent or proxy) to make decisions on his or her behalf[v]. For example, a durable POA would enable an adult child to continue investing, handling transactions and paying taxes on behalf of someone who is either incapacitated or no longer of sound mind. It is critical that a “takeover plan” is well thought out and agreed upon ahead of time, as the person who will eventually assume decision-making authority should begin playing an active role well before a POA would kick in. Other documents to consider with legal advice are Wills and a Living Trust.
Though only one facet of an Alzheimer’s diagnosis, a proactive approach to money management can truly help to make an already challenging situation just a little more manageable.
Sabina Sewillo is a
Family Wealth Advisor, Vice President and Financial Advisor with the Wealth
Management Division of Morgan Stanley in Chicago.
The information contained in this column is not a solicitation to purchase or
sell investments. Any information presented is general in nature and
not intended to provide individually tailored investment advice. The
strategies and/or investments referenced may not be suitable for all
investors as the appropriateness of a particular investment or strategy will
depend on an investor’s individual circumstances and
objectives. Investing involves risks and there is always the
potential of losing money when you invest. The views expressed herein are those
of the author and may not necessarily reflect the views of Morgan
Stanley Wealth Management, or its affiliates. Morgan Stanley Smith Barney,
LLC, member SIPC.