One big issue for financial planners working with elderly clients is cognitive impairment. This comes into play more often than you might realize.

Sixteen percent of the U.S. population between age 70 and 89 has at least some form of mild cognitive impairment, according to a 2010 study by the Mayo Clinic. And according to U.S. government data, 5% of the population over the age of 65 has varying degrees of Alzheimer’s, with the affected percentage doubling every five years thereafter.

To protect themselves and their senior clients, Brian Parker, a fee-only, Los Angeles-based CFP, suggests that advisors document the planning process carefully, especially with regard to who will make financial decisions on an elder client’s behalf.

In the September issue of Financial Planning, Parker recommended a systematic approach that includes the following steps:

  • Review the planning done to date, including wills, trusts and durable powers of attorney. Get outside legal help to make any changes that are required.
  • Address the big questions, such as whether a client will continue to live at home or move to a facility. Also, if the client moves, does the home get sold? Does the client want to involve his or her children in the planning and decision-making? Who will handle the bill payments?
  • Document all client conversations and related decisions. Record the names and contact information of the people involved.
  • To discuss these issues, meet with a trusted circle that may include children, other family members and trusted advisors whom the client wants to involve.

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