Making plans well in advance and watching for warning signs can help family members act quickly when needed
While conversations about money are uncomfortable, it’s best to have them well before the need arises. And this lesson is particularly crucial when planning for an aging parent’s cognitive decline.
“Cognitive decline, abetted by isolation, is a powerful force that makes aging parents easy targets for scam artists, misleading advertising and offers for high-priced, unnecessary goods and services,” wrote Bernard Krooks, founder of Littman Krooks LLP, on WealthManagement.com.
Clients, according to Krooks, should broach the topic of taking over their aging parents’ affairs well before they become incapacitated. That allows the parents to have an active role in the decision, and it would help the client to be oriented properly about their parents’ financial situation.
Should the aging parents wish, they have the opportunity to use binding legal instruments like durable powers of attorney and trusts to specify a successor to take over, as well as the conditions for them to step in and any other preferences and priorities the aging parent may have. Having these in place could also help the family avoid the cumbersome legal process of establishing guardianship, as well as potentially having to put the parents’ medical condition in public records.
“If an aging parent isn’t initially willing to execute a power of attorney or create a trust, family members shouldn’t be reluctant to raise the subject up again,” Krooks said.
The relatives of aging parents should also watch for signs of incapacity or financial abuse, he added. While they may resist getting evaluated for incapacity, relatives may look for other signals to step in like a messy residence, refusal to shower or bathe, wearing the same clothes for days on end, difficulty driving, uncharacteristic forgetfulness, and an unusual number of bruises or scrapes on their body.
As they assist with non-financial issues, relatives should take the chance to ask the parent if they want assistance in paying bills, balancing checkbooks, and other financial tasks.
Financial exploitation is another issue relatives should be on the alert for, Krooks added. Noting the significant underreporting of elder financial abuse, he said relatives should take note of common signs such as missing money or personal property, unexplained withdrawal or wire transfer of funds, unpaid bills, unfamiliar names on bank or retirement accounts, changes in beneficiaries on legal documents or financial accounts, and the sudden appearance of an unknown caregiver in the aging parent’s home.
“The presence of any of these signs should prompt clients to investigate and offer assistance if needed,” Krooks said. “If multiple trouble signs are present, more aggressive action may be necessary to acquire control over the aging parent’s financial affairs.”
Related stories:
"Scams go where the money is" says ASC
Majority of pre-retirees expecting to extend working years, says study
