As financial planners know well, one of the early signs of Alzheimer’s disease and other dementias is an inability to understand financial concepts.
This causes many to quickly lose control of their daily finances.
Wednesday's issue of the Journal of the American Medical Association tells the story of Mr. L, a widower with Alzheimer’s. At the time of his diagnosis, he completed a power of attorney for health care but not for financial matters and all bank accounts remained in his name. Two years later, his daughter reported he had refused to pay for hearing aids or for a substitute caregiver while his primary caregiver was on vacation, yet he had bought four humidifiers and the bank had called his daughter several times about questionable transactions. When his daughter asked his geriatrician to write a letter to the bank stating he was financially incapable, she said that he would refuse to sign over his assets to her. “He would be furious,” she said.
Cases like these led the periodical to urge doctors to counsel patients and families to make new financial arrangements as soon as possible after a dementia diagnosis.
“Patients start having difficulty managing bank statements and paying bills in the pre-dementia phase – mild cognitive impairment – and then, often within a year, lose more basic financial skills like counting coins and paying with cash,” said lead author Dr. Eric Widera, a geriatrician at the San Francisco VA Medical Center and an assistant clinical professor of medicine in the Division of Geriatrics at the University of California, San Francisco.
Even before the patient is cognitively impaired, doctors might recommend that families create a durable power of attorney for finances. Another strategy is to open joint accounts that can be monitored by a trusted caregiver.
“Proper financial planning will leave both the patient and the caregiver with more financial resources to deal with the consequences of the disease,” Widera said. “If you wait until it’s too late for the patient to be involved in the decision-making, you have to go to court.”
Financial planners, who work closely with clients, often for many years, may be among the first to notice worrisome developments. In many case, no spouse is at hand. Clients with dementia are typically single or widowed; many are women whose husbands handled family investments during their married lives. The JAMA study includes questions a doctor (or financial planner) might ask to probe for impairment, such as when was the last time you were late paying a bill? or have you received any calls from the bank about your purchases?
The JAMA website also includes a list of tests assessing financial capability in seniors.
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