How to Protect Your Parents' Finances if They Have Alzheimer's Disease
Those who are diagnosed with Alzheimer’s disease often can continue to function and live independently for a while. It’s not until the middle or late stage of the disease that they will need hands-on help with activities such as bathing, dressing and eating.
However, even in the early stage of Alzheimer’s disease—often before there is a diagnosis—staying on top of financial matters can be a challenge. That’s because the disease impacts financial management skills and financial decision making, leaving those with Alzheimer’s vulnerable to money mistakes and exploitation.
So it’s important to get involved with your parents’ or aging loved ones’ finances as soon as there is a diagnosis of Alzheimer’s. If there’s no oversight, your parents could jeopardize their financial well-being by making costly mistakes and becoming victims of fraud. Make sure you take these steps to protect their finances.
[ Read: Financial Signs of Alzheimer’s and Dementia ]
Get the legal right to manage their finances
Make sure that your parents have named you their durable power of attorney so that you have the legal right to make financial decisions and transactions for them. If they’re in the early stage of Alzheimer’s disease, they might still be mentally competent enough to sign a POA document. If they are no longer competent, you’ll have to go through the court process to be named their conservator to have the legal right to manage their finances for them.
Also, make sure they have named you their health care power of attorney so you can oversee their care and make medical decisions for them once they are unable to themselves. They also should have an advance directive that spells out what sort of end-of-life medical treatment they do or do not want and a will or trust that stipulates who gets what when they die.
[ Read: How to Get a Bank to Accept Your Power of Attorney ]
Take a financial inventory
To protect your parents’ finances, you need to know what accounts and assets they have. Ask them to help you take inventory and create a list of their accounts, if they don’t have one already.
If they’re not willing to cooperate or are having trouble remembering details of their finances, you’ll have to piece together their financial picture by going through their mail, their desk or filing cabinets, home safe and storage boxes to find account statements and financial documents. You also can use your power of attorney status to gain access to their bank accounts to see how much money is coming in and going out and what sort of bills are being paid.
Make sure they haven’t been sold inappropriate investments
As you piece together your parents’ financial picture, pay close attention to documents related to investments and other financial products such as annuities. Unscrupulous sales people might have talked your parents into buying investments that are too risky, that have excessively high fees or that simply don’t make sense for their stage of life. You might need to talk with a financial professional such as a fee-only financial advisor about the best way to move your parents’ money out of these investments.
Set up automatic bill payments
Your parents likely are forgetting to pay bills on time—or at all. To help them avoid late fees and prevent bigger problems such as a foreclosure on their home, set up automatic payments for as many of their bills as possible. Have statements sent to you so they don’t get confused and accidentally pay bills twice.
Monitor their accounts
Keep tabs on your parents’ bank, investment and credit card accounts for unusual transactions. Rather than log into their accounts daily, consider using a service such as Carefull, which provides 24/7 account, credit and identity monitoring. You’ll get alerts when Carefull spots something unusual. Then you can investigate and act quickly to limit any damage.
Audit their wallets
Make sure your parents aren’t carrying around information such as their Social Security cards that can put them at risk of identity theft if their wallet is lost or stolen. Encourage them to remove their Medicare cards from their wallets and to give them to you for safekeeping so they don’t end up in the hands of someone who might use that information to get medical care or submit fraudulent claims. And limit the number of credit cards they have to one so there are fewer cards to be used to rack up debt or to cancel if their wallet is stolen.
Keep spending under control
Your parents might start spending recklessly as their financial-decision making ability declines. If so, you can curtail their spending by replacing their debit and credit cards with a limited amount of cash for “spending” money or with a prepaid credit card. To avoid meeting with resistance, tell your parents that it’s safer to carry just a small amount of cash or just one credit card.
Protect against scams and fraud
Start by reducing the number of spam calls your parents get by downloading a call-blocking app from their wireless phone service provider or a third party such as Hiya or Nomorobo. You’ll need to go a step further by putting the following instructions in writing and hanging them up as a reminder for your parents:
- Let all phone calls go to voicemail, then listen to your voicemail to determine whether you should call back. If you’re not sure, contact me for help.
- Don’t click on any links in emails or text messages you receive.
- Be aware that requests to make payments by wire transfer or gift cards are scams.
- Government agencies such as the IRS, Social Security Administration and Medicare won’t call and ask you for your personal information or for payments over the phone.
Check in frequently with your parents to keep the lines of communication open. You don’t want them to feel isolated, which can make it easier for scammers to take advantage of them.
Freeze their credit
Signing your parents up for a credit and identity monitoring service such as Carefull can keep you aware if their credit or personal information is misused. It also will provide up to $1 million in identity theft insurance coverage. However, you should take it a step further by freezing their credit reports at all three credit bureaus—Equifax, Experian and TransUnion—to prevent fraudulent lines of credit from being opened in their names.
Prevent excessive charitable giving
When financial-decision-making ability declines, it can be hard to know when to stop giving. So if your parents’ charitable donations are getting out of hand, help them identify the causes they care about most. Make a list of the causes and a dollar amount they can afford to give to each. Ask them to make a note on the list when they give so they don’t forget and give again.
[ Find Out: How Do I Stop My Mother from Giving Away All Her Savings? ]
Keep legal and financial documents secure
If your parents are in an assisted living facility or have a housekeeper, professional caregivers or others who work in their home, keep all of their legal and financial documents securely stashed away so they don’t fall into the wrong hands. All it takes is one unscrupulous person to get ahold of that information and steal their identities, drain their accounts or exploit them financially.
Also, keep your parents’ jewelry and valuables stored in a home safe, a safe deposit box or in your home. If your mom is reluctant to put away her jewelry, give her inexpensive replacements to wear. You don’t want to risk having family heirlooms stolen or lost.
As your parents’ dementia progresses, you or another trusted family member will have to play an increasingly greater role in their financial lives. If you don’t feel comfortable or competent in your ability to manage their finances, get professional help from an accountant, financial advisor or even a daily money manager who can manage your parents’ daily finances. The key is to make sure they get the help they need to protect their financial well-being.
[ Keep Reading: Dementia and Managing Money: When Your Parent Refuses to Let You Help ]
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