Keeping Finances Safe When a Loved One Has Dementia

Keeping Finances Safe When a Loved One Has Dementia

Dementia can bring on all sorts of changes, and some of those changes can take you by complete surprise. For instance, let’s assume you and your spouse seem to have finances under perfect control. But then you go to the grocery store one day and the cashier regretfully tells you that your credit card was declined. Or what if you went to pay the mortgage only to discover that there isn’t enough money in your bank account to cover your obligation?

Confusion might quickly lead to the feeling of a sinking heart when it dawns on you that the bank accounts are empty because your spouse has spent the money.

You may ask yourself how this happened, or why did they do it? Understanding can take a long while to come, especially if the person you love offers no clear explanation. It might take a few other signs before you finally realize what might be happening: What if they did it because the onset of dementia has led to serious lapses in thinking and judgment?

Sometimes financial issues are one of the first signs of dementia. In 2020, a study at Johns Hopkins University looked at 81,000 Medicare beneficiaries and found that those with Alzheimer’s and other forms of dementia began to develop financial problems up to six years before they got a formal diagnosis.1

And according to the Journal of Human Capital, those who have even mild dementia can show significant financial difficulties. They become more susceptible to fraud. Forgetfulness can lead to missed payments and overdue bills. And their lack of self-awareness of their cognitive state can lead them to believe they are handling money just fine, when in fact, their accounts are in disarray or being bled dry.2

What do you do? You can’t blame them for something that is happening in their brain that they can’t control. But you can’t allow financial devastation to occur if you plan to have enough money to help them – and you – through what should be the carefree, golden years.

Fortunately, there are things you can do to help, and safeguards you can put in place before dementia has a chance to damage finances and credit.

Have the Conversation

Family caregivers need to be ready to have the conversation about finances with their parent, spouse, or other loved one to ensure that these issues don’t happen. Spouses or partners need to stay on top of what is happening with the person they love. But what if finances go downhill before you realize dementia is a problem?

The National Institute on Aging says the onset of dementia can bring on changes in mood and behavior, depression, impulsiveness, irritability, and paranoia.3 Add those together and what do you get? Your loved one might become difficult to talk to about the financial changes that need to take place.

Here are some ways to make the discussion easier:

·        Get their doctor involved. Explain what is happening and ask their doctor to talk to them about cognitive impairment and how it affects their finances. Sometimes hearing something difficult from an authority figure they trust will help the reality sink in a bit more.

·        Request power of attorney. This might be very difficult if your loved one thinks they have no problems handling money; most people who have financial problems during dementia won’t grasp how bad the issues are. Talk to them about the possibility of power of attorney so you can help them pay the bills and otherwise protect their accounts.

·        Meet with their banker. Sometimes a person who is well-versed in the financial system can earn the kind of trust that no one else can. If you or your loved one have a relationship with a banker or consultant, sitting down for a discussion might help them understand that their finances are in danger.

·        Talk to a social worker. What if your loved one is at a point where reasoning won’t work? It’s time to talk to a social worker. The social worker will be able to guide you through how to take control of finances without erasing your loved one’s autonomy.

No matter what you do, always include your loved one in conversations about finances. Even if you don’t feel as though they understand, they might surprise you. It’s their money, and it’s the right thing to do.

Set a Firm Budget

If you have access to your loved one’s financial accounts, look at how much money is coming in and going out. This should be pretty easy for spouses, but for family caregivers, it might take some discussion to get that kind of access to your loved one’s accounts.

Create a budget. Include even the smallest regular payments, such as the cost for an emergency button alarm (which can be as low as $19 per month) or the $20 they pay for pet food each month.

Then present it to them with your concerns. Even if it seems that they have plenty of money left over at the end of the month, remind them that there will be other expenses in the future, such as the potential costs of long-term care. Being able to see the numbers clearly might help them understand the issue.

But then you might run into another hurdle: the reluctance or refusal to change their spending habits. In that case, you can try to find a compromise.

For instance, maybe they don’t need that cable package that runs $300 per month – but they are insistent on watching their football games on the weekends. Present them with options for streaming services or other packages that bring the cost down. If you can show them that they can still have the things they love at a lower recurring cost, they might be more open to budgeting.

Use Bill Pay and Credit Protection Services

The moment you notice financial problems, start putting safeguards in place. If you are a spouse and share bank accounts or have access, this part is much easier. If you are a family caregiver but not a spouse, you might have to get creative!

Start with automatic bill pay. This service can help ensure that the important bills are paid without anyone having to write a check or log on to make those payments. This can include everything from the mortgage to the electric bill, lawn service, or an emergency safety alert system for elderly adults. You simply set the frequency of the payment and when the bill comes in, the service pays for it on your behalf out of a designated account. If there is a problem with making the payment, the service will alert you immediately.

Set up programs that spot unusual spending. Companies like Carefull and EverSafe scan accounts for financial problems, including unexpected large purchases, wire transfers (which could indicate fraud), and unusual patterns of behavior that could be red flags for dementia or other problems. Some of these services will also send an alert the moment that a certain threshold of spending is exceeded so you are always aware of what is happening financially.

Institute a credit freeze and fraud alert. Sometimes a loved one will try to get around budgets and spending limits by taking out a new credit card. A fraud alert means that before a credit card issuer approves an application, they will request more information. This means that you might have an opportunity to stop the credit card application process. A credit freeze means that no one will be able to issue a new credit card at all.

Both of these options can also help if you worry that your loved one will become a victim of fraud or financial scams, as most scammers will not be able to provide the additional information the credit card companies will request.

Look to Your Own Future

Though you can’t turn back the hands of time and head off the financial problems your loved one is already facing, you can apply the lessons learned to your own life going forward.

Remember that dementia can strike anyone, and it can creep up on you. Since you will often be unaware of any cognitive decline, you might think everything is fine when it most definitely is not. Putting safeguards in place right now, while you are still of sound mind, is incredibly important.

Not only should you be using fraud alerts and living by a solid budget, you should also plan for the future.

Talk with your children or other loved ones – those who might take part in your care in your later years – about setting up power of attorney, tools to track spending, and all the information they need to help you protect your accounts. Be open with them about your day-to-day money management. The more a trusted loved one knows about your financial life, the more likely they will be able to help you right away if the need arises.

If you have a spouse, this process becomes much easier from a legal standpoint. It’s a good idea to make sure you both know about all accounts and you are partners on each one of them. That allows both of you to handle the finances, which is vitally important if one of you becomes incapacitated or begins to show signs of dementia.

You can also agree to a “trigger” with your finances that serves as a signal that one spouse needs to take over. For example, any spending over a certain amount without express consent from the other could be a trigger.

It’s also very important to consider the potential costs of future medical care, long-term care, and aging in place. Sit down and have a long talk about what you might expect your finances to look like in the future, especially if you will face a big change soon, such as retirement or downsizing your home.

And as you look at your finances and figure out how to safeguard your future, keep your good health in mind – your finances will be in much better shape if you can stay healthy and independent for as long as possible. Aging in place solutions, including a GPS medical alert pendant with fall detection for seniors, can provide the peace of mind you need to know you are doing all you can to protect both health and finances, which are often interlinked.