I’m lying in bed after a long day. My thoughts are jumbled. My mind tries to make sense of a whirlwind of impressions, perceptions, and experiences of the day. I’m beginning to dream.
It’s in the future—ten or twelve years from now. My three daughters are all with me, but they’re older now, approaching middle age.
The conversation isn’t pleasant.
They remind me that I’m showing signs of forgetfulness and confusion. They tell me I shouldn’t be driving anymore. They say they’re concerned I can’t take care of myself.
I become defensive. My daughters don’t see me that often! I know what my capabilities are. I just need to be more careful.
I don’t want to lose my independence. I don’t want those whom I’ve cared for to have to begin caring for me.
With a start, I bring myself back to the moment. I don’t like the direction my dream is taking me.
It’s an irritating and scary dream, but all too possible, if I’m honest with myself.
Reflections on the Dream
As we grow older, I suspect we all have moments in which we wonder whether we’re experiencing normal forgetfulness…or are we showing the first signs of dementia?
We may joke about it, but we have to think about the possibility if we’re realistic.
As lifespans increase and the risks of fraud perpetrated against vulnerable seniors grow, addressing these risks becomes more urgent.
This area of our life is not something we can ignore and hope for the best.
Here are four steps to take to prepare yourself and your loved ones for the possibility you may at some point suffer from diminished mental capability or be at increased risk of financial exploitation.
Step One: Acknowledge the Possibility
Assuming that you’ll be sharp until you take your final breath is comforting, but statistics suggest it’s far from certain. It’s estimated that 35% of people age 85 or older have Alzheimer’s, the most prevalent form of dementia.1
Another study asserts that upwards of 25% of clients like ours over 65 are at risk for poor financial decision-making or exploitation.2
We all hope these statistics won’t include us or our loved ones. But hope is not a strategy.
We need to accept the possibility that one day, we won’t be as clear-thinking as we are today or were a few years ago. That’s not a cause for shame or regret—it’s simply an acceptance of a statistical possibility.
And it’s a subject we should discuss with our spouse, children, or other loved ones. These are the people on whom we may rely as we get older. It’s a conversation to have now, while we can discuss it openly and without defensiveness.
Step Two: Make Clear to Your Family Your Preferences
If held early enough, that conversation can be, well, a conversation. Acknowledge the possibility that in the future, your family may recognize you’re not as sharp as in the past. Or you may be making poor decisions. Or you’re beginning to show signs of dementia. Or you’re spending money irrationally—sending checks to Nigerian princes or handing money over to a “friend” who has a needy daughter.
Make clear to your family what’s important to you. Describe how you would like them to take care of you if you’re not capable of taking care of yourself.
If you have long-term care insurance, let your family know about it. Let them know how you feel today about moving in with your children or other relatives versus becoming a resident of a memory care unit or nursing home.
How do you feel about using your savings for a place to stay, diminishing your kids’ inheritance, or imposing on the kids to care for you but safeguarding the monetary legacy for them? What are the critical factors for you should you no longer be able to maintain your independence?
In short, to the extent possible and practical, share with your loved ones your values and your preferences while there’s still time to discuss them rationally and conversationally.
Step Three: Discuss the Possibility that You’ll Argue with Your Family
In doing this exercise for myself, I realize I may disagree with my kids. How will I respond when they tell me it’s time for them to take away the keys or the credit card or that they’re going to invoke the Power of Attorney and take over my finances?
“Surely they’re over-reacting!” I’ll tell myself. “I’m perfectly capable of ______ (fill in the blank).”
So, it would help if you discussed how to resolve such a difference of opinion.
Family dynamics are all different. For my family, a solution I find acceptable is if at least two of my three daughters agree that it is time to intervene, I’ll accept their judgment.
I don’t want just one daughter to have that power by herself. But they’re intelligent and loving kids. If a majority thinks I need to give up the keys, surrender the credit card, or move into a memory care unit, I’m telling them now that they should force me to accept that judgment, even if I vehemently disagree with them at the time.
There may well come a time when I’m not as much in control as I think I am. I want my kids to know that I’m trusting them to exercise the same “tough love” my wife and I have had to use from time to time with them.
You may have a different approach. Perhaps you have one relative or friend you trust to make the judgment and who has the strength of character to tell you what you don’t want to hear.
Maybe you have a series of tests or factors that you think would be helpful to make the determination. Perhaps you’re willing to entrust the decision to a family physician.
Whatever the solution, thinking it through before it’s needed and documenting it may make a tough decision somewhat more straightforward, should it be necessary.
Step Four: Revisit the Topic from Time to Time
Finally, it’s important to revisit this topic periodically.
That’s both to remind all the parties involved that plans are in place and to provide an opportunity to fine-tune things as life unfolds.
That this topic may be uncomfortable to ponder or discuss doesn’t relieve us from doing the responsible thing. We owe it to our loved ones and ourselves to think through the implications of dementia or diminished financial capability and how that might impact all of us.
It’s the responsible thing to do.
An Afterword: The Role of Your Financial Advisor
The focus here has been on the family, those likely most involved should you have dementia or become vulnerable to financial exploitation. But your advisor should be familiar with your financial history and goals. They may note signs of impending difficulties and can be a resource to the family.
We’ve had experience dealing with clients who have become vulnerable. We gather “trusted contact” data to identify people who may be able to help ascertain problems. Advisors throughout the industry also undergo training and are becoming more sensitive to the issue. We would encourage readers to share their thoughts on this topic with their financial advisor.
And if you’d like to discuss your situation in more detail with us, give us a call. Let’s talk.
- Rajan KB, Weuve J, Barnes LL, McAninch EA, Wilson RS, Evans DA. Population estimate of people with clinical AD and mild cognitive impairment in the United States (2020-2060). Alzheimers Dement 2021;17. In press. As quoted in Alzheimer’s Association, 2021 Alzheimer’s Disease Facts and Figures, accessed at https://www.alz.org/media/documents/alzheimers-facts-and-figures.pdf.
- Heye, C., Loewy, E., and Wade, K., Cognitive Overload: The Coming Surge in Diminished Capacity Cases and What Wealth Management Firms Can Do to Protect Their Clients and Themselves.
Disclaimer: The information provided here is general and intended as educational in nature. It is not intended nor should it be considered as tax, accounting, or legal advice. Investec Wealth Strategies and its advisors do not provide tax, accounting, or legal advice. We recommend you seek the counsel of your attorney, accountant or other qualified tax advisor concerning your situation.