If You Develop Dementia, Are Your Finances Protected?

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As you grow older, the chances increase that you could develop dementia. Although the majority of seniors will never develop the disease, many will. When it comes, it could put your money and assets at risk unless you take financial planning steps in advance.

According to ALZ, an organization that provides information about Alzheimer’s, there are about 6.2 million people in the United States who have Alzheimer’s now. At age 45, the lifetime risk of a woman developing the disease is one out of five. For a man at age 45, the lifetime risk is one out of 10. The risk of getting Alzheimer’s for older black Americans is about twice as high as that of older whites and one-and-a-half times as high for older Hispanics.

Symptoms of Alzheimer’s

Once you start to develop Alzheimer’s or some other form of dementia, you will no longer be able to reliably make good decisions about your money and assets—and other normal daily activities of life. The National Institute on Aging provides some symptoms of Alzheimer’s, including:

• memory loss
• inability to make sound decisions
• difficulty in planning or solving problems
• losing track of time and dates, and location
• trouble managing money and paying bills
• reduced ability to handle tasks such as bathing
• changes in your personality
• more anxiety and aggression.

An article by Forbes says that many seniors can still be highly functioning in other areas, but mild cognitive impairment can cause financial loss in various ways. It may include making mistakes, incorrectly making an investment transaction, or becoming a victim of fraud.

Once you no longer can make sound financial decisions, you become open to the possibility that people can take advantage of you. But if you make good estate plans in advance, it becomes difficult for this to occur.

Identify Your Financial Assets and Responsibilities

Although you may not feel a need yet, you should make a list of all your income and bills. Add to it any retirement income that you are getting. Then, add account information and passwords. This information will be necessary if you become unable to make sound financial decisions, and someone else must make them for you. It is better to be prepared and to make it easy for someone else who will need quick access to it.

Make a Will

Once you have the list of your assets, create your will. This document directs the distribution of your assets to various individuals after you die. You can also put in it how minor children are to be cared for, gifts, funeral, burial arrangements, etc.

Write Your Advance Directives

You can further protect your finances by creating two other documents. They are:

• The Durable Power of Attorney for Finances

The durable power of attorney for finances grants someone the authority to make financial decisions for you. You choose the person you want to make the decisions, and it should be someone you trust.

You determine the authority that they have, which could be for all of your financial transactions, limited to a single transaction, or area of finances—such as business decisions, or for a limited time. You can create more than one power of attorney for finances document for different areas of responsibility—if you desire.

Another option would be to set up a trust, detailing how you want the money dispersed while you are still alive—and afterward. Once you die, a durable power of attorney for finances is terminated, and everything not put in the trust goes to the estate.

• The Advance Healthcare Directive

You will also need an advance healthcare directive. It dictates the type of medical treatment and care you will receive if you become unable to communicate your desires and limits for treatment. It is often called a living will.

The same document also names a healthcare proxy. You select that person when you create the document. This person will have the power to make medical decisions for you, so you must tell them your desires and values to enable decisions to be made in accordance with your intentions.

Automate Your Bills and Income

You can prevent forgetting to pay bills or deposit income checks by automating the processes. Use automatic deposits and bill pay to ensure the actions do not depend on your memory.

You also want to be careful about credit card expenditures. Keep an eye on all activities on your monthly billing to ensure that missed payments or charges do not ruin your credit score.

Make Preparations to Get Help

Before a worst-case scenario occurs, get someone to help you as it becomes more difficult to manage your finances. Have them sit down with you and help write your monthly bills and get advice from them on any out-of-the-ordinary purchases you are about to make. Especially get help before making financial transactions or dealing with contractors, agents, car repair mechanics, etc.

Purchase an Annuity

An annuity can provide a regular income and help ensure the money is safe. They cannot be changed easily and do not allow withdrawals. You also will not be able to change the size of the monthly check. Its stability can protect you from making mistakes, wasting money, and fraud, but will still give you living expenses every month.

Sign Up on the Do Not Call Registry

When people develop dementia, even in the early stages, they often become more susceptible to being deceived by tricksters and spammers. It is one way to lose money quickly. APlaceForMom suggests registering phone numbers with the NationalDoNotCall Registry to help eliminate spam calls, which can help reduce falling prey to their tactics.

You can protect your finances further from dementia by talking to a personal financial advisor or estate planner about other aspects of your finances. You may also want to buy life insurance so that the assets are distributed to your beneficiaries tax-free. An irrevocable trust can be used to protect your assets from creditors and other abuse.

The Epoch Times copyright © 2023. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.