The Financial Perils of Dementia Protecting your loved ones June 25, 2014 It’s no secret that Americans are living longer. But for many people, increasing lifespans come with the loss of cognitive function and even dementia. One of the key dangers for the afflicted—and a major worry for their loved ones—is the possibility that they could fall victim to financial fraud or abuse. We have many clients coping with loved ones in this situation, and we thought it would help you to know how to protect your own family from the financial effects of cognitive loss, Alzheimer’s disease and other forms of dementia As with most things in life, the best way to help an aging parent or other family member avoid financial difficulties brought on by dementia is to be proactive in your planning efforts. Start talking with your loved one about personal finances while he or she is still healthy or in the earliest stages of the illness. This will help to build the trust needed for a gradual transition in financial management, which is often crucial for their financial well-being. Financial fraud and abuse According to the Centers for Disease Control and Prevention, dementia is an umbrella term for a group of cognitive disorders typically characterized by memory impairment and difficulty in “executive function,” or the ability to plan, organize and reason. Alzheimer’s disease is perhaps the most common form of dementia, though several others exist. Besides changes in physical and emotional health, people with dementia lose their capacity to perform the financial tasks of daily living. In fact, this may be the first noticeable sign of the disease and an early indication that a person is losing the ability to live independently. Sadly, as the disease progresses, most people lose all ability to manage their finances on their own. Some of the signs that your loved one could be experiencing difficulty with personal finances include trouble making change, paying for a purchase or calculating a tip; forgetting to pay bills, losing payments or writing the same check multiple times; finding new or strange purchases on credit cards or new merchandise in the home. Look for sudden changes in account balances, overdue payment notices, discontinued utility, telephone or other services. Taking Action You or other family members can take proactive steps to prevent elder financial abuse from happening, especially if an elder is exhibiting signs that he or she needs help managing financial affairs. – Visit regularly. Ask about phone calls the person has received and watch for a full mailbox. Large numbers of mailings from marketers or charities could indicate that the elderly person is on a “sucker list.” – Set up automatic bill payments. If your loved one is open to your help, suggest establishing automatic online bill payments and check deposits. Having a centralized, easily monitored system for all incoming and outgoing money will provide protections from potential fraud, while also helping you ensure that bills are being paid on time. – Inventory key documents. Even if your loved one is unwilling to grant you access to his or her financial accounts, it is important that you or someone else they trust knows where all important documents are kept. This includes documents associated with investments (deeds, titles, stocks, bonds, etc.), benefits (pension, IRA accounts, insurance, Social Security, etc.) and expenses (bank accounts, monthly and other bills, etc.), as well as legal documents such as wills or durable powers of attorney. – Use the National Do Not Call registry. Call 1-888-382-1222 or visit donotcall.gov. This will help to limit phone calls from telemarketers. – Discuss hazards. Tell your loved one that it is never a good idea to divulge personal information in person, over the phone or online, or to hire someone who shows up at the door unsolicited. Tell your loved one that it is never a good idea to divulge personal information in person, over the phone or online, or to hire someone who shows up at the door unsolicited. – Guard the mail and trash. Deposit outgoing mail in collection boxes or at the post office. Open a post office box for incoming mail. Shred personal documents before discarding them. – Keep computers protected. If the person has a home computer, be sure they have the latest security updates and virus protection installed. Advanced protection strategies Family members and caregivers must plan ahead for a time when a loved one will no longer be able to make decisions. The most important thing is to build consensus on the delegation of financial decision making, and to establish trusts and other wealth protection strategies before serious problems surface. – Durable power of attorney (POA). The best way to obtain legal authority to manage a person’s financial affairs is to get the person’s consent in a durable power of attorney document. A durable power of attorney can specify how a person wants his or her financial affairs dealt with in the case of disability or serious illness, and it designates someone who can make any financial decisions on the person’s behalf. The power-of-attorney agreement ends at death, meaning a POA cannot handle the loved one’s financial affairs after he or she passes unless the POA is also named as the executor of the estate. – Living trust. A living trust is another way for a person to give instructions for managing assets. The person who creates the trust (i.e., trustee) maintains control over the trust and its assets during his or her lifetime unless he or she can no longer do so due to incapacity or for some other reason. At that point, a successor trustee, named when the trust was established, would assume management of the trust. To make a living trust effective, all of the person’s assets—real estate, brokerage accounts, collectibles, etc.—must be transferred into the trust. A living trust may or may not provide tax advantages. Let’s have a conversation These are just some of the ways you can help to protect your loved one’s finances should illness impair his or her ability to do so on their own. Please contact us for help forging a more comprehensive plan. Sources Alzheimer’s Association, alz.org The National Institute on Aging (NIA) AgingCare DementiaCareCentral UBS Financial Services Inc. 100 Overlook Center Suite 100 Princeton, NJ 08540-7814 609-452-8188 800-257-5141 Paul C. Namm Vice President--Wealth Mgmt Senior Portfolio Manager - Portfolio Management Program 609-919-3685 paul.namm@ubs Marc H. Namm Financial Advisor 609-919-3687 marc.namm@ubs Carol Hammond Registered Sales Assistant 609-951-5659 carol.hammond@ubs
Posted on: Fri, 27 Jun 2014 11:38:00 +0000
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