Financial Planning Strategies for a Loved One With Dementia

Alzheimer’s and related dementias are progressive brain diseases that cause a decline in memory, thinking, and cognitive abilities.

Caring for a loved one with dementia involves a lot of moving parts. In addition to managing a loved one's daily care, family caregivers are often responsible for their loved ones' finances.

Many families ignore finances because they are overwhelmed with the stress of caregiving, discussing finances with parents is uncomfortable, or they don’t know where to start.

However, protecting your loved ones and assets and securing their financial future is critical.

In this guide, we’ll discuss essential financial planning strategies for a loved one with dementia.

Initiate Financial Discussions Early

Dementia affects individuals differently, and it’s impossible to know how fast the disease will progress. Therefore, it’s critical to initiate financial discussions as soon as a diagnosis is made.

This allows your loved one to participate in the planning process while they can still make informed decisions.

Be prepared if your loved one is initially hesitant to discuss their finances with you. It’s common for older adults to see finances as personal and not something discussed with their children or other family members, even as adults.

Slowly ease into financial discussions to familiarize yourself with your loved one’s finances. Always include spouses, be patient, and casually suggest a joint meeting with their financial advisor if they have one.

Explain that you’re there for support and assistance, not to take over. Let your loved one know you want them to be involved in decisions so they can secure their financial future.

Knowing When to Intervene

Find a way to initiate financial conversations as soon as you see signs of trouble or inconsistencies.

For many families, this can be uncomfortable. You may feel you're being disrespectful, invading their privacy, independence, or dignity, especially when dealing with a parent. Or you may not be ready to take over the responsibility for your loved ones’ finances.

However, ignoring telltale signs can put your loved ones' hard-earned money at risk and make things harder for you in the long run.

Here are warning signs to look out for:

• Donating money to new or unknown charities
• Unopened or unpaid bills
• Falling for scams
• Increased loans to unfamiliar friends or family members
• Calls or letters from creditors or collection agencies
• Increased or unnecessary shopping or spending

Regularly monitoring your loved one’s accounts is an excellent way to detect and avoid potential problems.

Organize Financial Accounts

The first step is to organize your loved one’s financial accounts. This includes retirement accounts, pensions, investment portfolios, home value, bank accounts, money market accounts, and insurance policies.

Create a financial inventory and budget of assets and liabilities to ensure you understand your loved one’s income and expenses.

Make a list of monthly expenses, account information, contact numbers, and online log-in information. If possible, speak with your loved one about setting up automatic mortgage, vehicle, utility, and insurance payments.

If your loved one has a financial advisor, now would be an excellent time to get their contact information and inform them of your loved one’s diagnosis.

Plan for Long-Term Care Costs

Dementia is a complex disease. As the disease progresses, your loved one may need help bathing, dressing, toileting, and eating. They may eventually have trouble speaking, wander, and exhibit emotional symptoms such as aggression or depression, making it difficult for family members to continue to care for a loved one without professional help.

Research, prepare, and plan for long-term care costs, such as those associated with an in-home health care aid, assisted living, or memory care community.

If not planned for, the cost of long-term care can be an unexpected expense that surprises seniors and their families.

According to Genworth’s Cost of Care Survey, the monthly median cost of care for a home health aide is $6,292, and $5,350 for an assisted living community.

Costs vary widely depending on the services offered and your geographical location. Memory care programs can cost as much as $10,000 per month.

Although many families struggle with moving a loved one into long-term care, memory care communities can significantly improve the lives of residents and their families.

These communities allow families to focus on enjoying time with their loved ones rather than the day-to-day struggle of caregiving.

Memory care programs are designed to enrich the lives of seniors with dementia, Alzheimer’s disease, and other memory-related issues. SHINE residents receive care from team members trained in memory care, one-on-one activities, and sensory experiences in a safe and supportive environment.

Hire a Professional

Navigating the finances of a loved one with dementia can be too much for family members to handle, especially when they’re overwhelmed with caregiving. Your loved one worked hard, and you don’t want to add mismanaging their money to your already full plate.

Don't hesitate to hire a professional if you feel overwhelmed or money management is not your strong suit.

Financial Advisor

A comprehensive financial advisor can provide invaluable guidance. They can help you develop a comprehensive financial plan, create a budget, and manage savings and investments.

If your loved one’s dementia is too advanced for them to help you locate important financial documents, a financial advisor can help by analyzing past tax filings and credit reports.

If needed, a financial advisor can introduce you to other critical professionals like elder care attorneys.

Elder Care Attorney

Elder law attorneys advocate for older adults and their family members and are experts in handling legal matters specific to them.

Elder Law attorneys specialize in:

• Long-term care planning
• Guardianship
• Retirement
• Financial planning
• Social security
• Medicare/Medicaid
• Estate planning
• Elder abuse
• End-of-life planning

Wrap-up

Managing the finances of a loved one with dementia is an added responsibility for family members who are already overwhelmed.

By initiating financial discussions as soon as there’s a diagnosis, recognizing and addressing warning signs, organizing financial documents, and creating a financial plan with a professional, you can successfully manage and protect your loved one’s finances.