For those of us who have aging parents, it can be difficult to know when to step in and begin helping them manage their financial affairs. One day, Mom may be fine, but the next day, you find her keys in the freezer. Is she really losing it, or is it natural forgetfulness?
This scenario is often referred to as the “gray zone” – the difficult place between being able to make decisions and being unable to manage your own affairs. When seniors start to experience cognitive decline, it is often gradual. Someone who is diagnosed with dementia, especially Alzheimer’s disease, may not immediately lose the capacity to make financial and legal decisions. However, it is often hard to tell when the time has come for someone else to take over these decisions for them.
With an Alzheimer’s disease diagnosis, the judgment needed to make good financial decisions can be impaired even at the beginning of the disease. Even if your parent looks and feels fine and acts normally, the truth is that those who suffer from dementia are less able to tell when something is not quite right about a financial offer or business proposal. This can create a multitude of issues, including arguments among family members and from the senior himself. Some family members may argue that Dad has always been in charge of the bills and has always made the investment decisions. They may be afraid of stepping on Dad’s toes when Dad is still able to understand that his decision-making capabilities are being taken away. On the other hand, Dad himself might object to no longer being able to handle his finances. He may become paranoid and begin to accuse family members of trying to “take his money.”
Another potential issue is that those with early cognitive impairment are vulnerable to financial abuse – whether it be from family members, scam artists, or caregivers. Some sources state that financial elder abuse can cost seniors up to $2.9 billion per year. When people are in the early stages of dementia, it can be easy to overlook this type of problem, especially if the impairment is not immediately obvious from speaking with the person. The fact is that Alzheimer’s disease can cause the brain to undergo changes without any outward physical signs of a problem.
So what is the solution for these problems? Even in the early stages of dementia, it is vitally important that your parent appoint someone else to take over the handling of their financial matters through a financial power of attorney. If you wait until your parent has completely lost the ability to make financial decisions, you may have to pursue a conservatorship instead – a months-long process that can cost thousands of dollars in attorneys’ fees and filing fees.
Another useful solution is for the family to have a neutral third party determine that your parent is unable to make decisions. Have a qualified neuropsychologist conduct testing that will determine what Mom’s condition is and how it will impact her decision-making ability in the future. This way, if Mom argues that nothing is wrong with her, the information about her illness will be coming from someone other than her children or family members.
Finally, another suggestion is holding regular family meetings with a neutral person such as a mediator to help prevent arguments among family members from interfering with what is the best decision for your parent. This can be especially helpful if one child does not think it is necessary for someone to take over the parent’s finances or if the parent is arguing that they are not incapacitated.
In order to make sure that you and your loved ones are protected before there is an issue with the ability to handle financial and legal decisions, it is important that you meet with an experienced elder law attorney who can advise you on the best plan for your unique situation.
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