When I came home today, I picked up my October issue of the AARP Bulletin, in which I found an article entitled Money and Memory: A Coming Crisis. (Note that the on-line version substitutes the word “Concern” for “Crisis”. I think the print version got it right!) After posting my blog on this general topic on October 1st, I appreciated the additional insights and suggestions provided by this article. Significantly, the article notes that “Alzheimer’s disease, the most common form of dementia, now affects 5.1 million Americans 65 and older – a number that’s expected to nearly triple by mid-century according to the Alzheimer’s Association.”
As an Elder Law attorney, one of the things I worry a lot about is how to help my clients protect themselves from – well – themselves. There’s no easy way to go about that because we all value our control over what we own, and most of us jealously guard our privacy about our finances. One of the most challenging parts of growing older is that we often don’t recognize changes in our own cognitive and management abilities, and we are particularly offended when someone suggests we might need some help.
I wouldn’t be talking about this if it wasn’t such a huge problem. And the shocking thing is that there are so many conscience-less and predatory people who are anxious prey on people who are not at their best and, the predators hope, are at their most vulnerable. I continue to be amazed at how many people are willing to intentionally plunge senior citizens into financial despair and destitution to make an easy buck. The consequences are devastating.
You can’t wait to plan until after a person has lost their mental capacity because they wouldn’t be able to sign enforceable legal documents. So what can you do about it?
Planning for an Uncertain Future
The best and most important thing you can do about it is to assume the worst about your future. In other words, you need to assume that at some point in your life, your personal comprehension and understanding about your financial situation will deteriorate in a meaningful way that will impair your ability to make sound financial decisions.
You have to anticipate that you may, while figuratively wandering in such a state, fall prey to the late night infomercials and start spending piles of money on things you don’t need and can’t afford – or that you’ll be taken advantage of by some smooth talker who shows up at your door or on your phone with some irresistible offer of goods or investments that seem too good to pass up. Unfortunately, the predator is sometimes a family member!
With those thoughts in mind, I offer these 3 ideas for you to consider:
1. Empower Your Financial Advisors to Help.
On October 1st, I posted a blog about how some financial firms are beginning to use an Emergency Contact Authorization Form, which is a document in which clients can list a trusted person who should be contacted if an advisor suspects a client is starting to lose their mental capacity or, worse yet, being financially abused or scammed. Don’t wait for your advisors to offer the document. Ask them for it. And if they don’t offer one, ask your attorney to prepare a form for you to give to the financial advisor for that purpose. The more people there are who ask for this, the more likely financial institutions will respond and develop good procedures and forms for helping seniors.
2. Get Your Legal Documents in Order
Since most of us aren’t going to know well in advance when our minds will fail us, there’s never a time like the present to put your affairs in order through a well-crafted estate plan designed to meet your needs. At a minimum, you should have a will, a health care directive (which generally includes a health care power of attorney and living will), and a durable power of attorney for business matters.
If you don’t want to give someone a power of attorney that is immediately effective for all purposes, consider giving an immediately effective limited power that authorizes your agents to communicate with your financial advisors, bankers, insurance agents, etc. regarding your financial well-being in the event that one of them suspects a decline in your mental capacity. Authorizing this kind of intervention will help to assure that you don’t squander away your assets at a time when you don’t know what you’re doing.
3. Get Your Family or Another Trusted Person Involved
Yes, I know that means giving up some privacy, but you have to decide what’s more important to you – privacy or protecting your nest egg for the future. If you empower someone close to you – someone who is likely to recognize changes in your cognitive abilities – they may be able to help protect you from yourself. Giving that person written authority to contact family members, physicians or others when they see changes in you may help prevent more harm in the future.
This is hard stuff to think about. None of us wants to think that we are going to “lose it” and need this kind of help. But statistically, there is a significant chance that many of us will need help. Anticipation and preparation is the best cure for this problem.