Johnson Financial Group‘s Kelly Mould, Senior Vice President and Wealth Sales Team Lead, gives us some insight on what financial and estate planning can provide for families of loved ones that are declining.
Both as a financial advisor and in my prior role as an attorney, I’ve seen families struggle with cognitive decline of an aging parent. Financial and estate planning can’t take away the heartache, but they can help families avoid some wrenching situations.
In this article, I’ll share two scenarios drawn from real-life circumstances I’ve observed. One points to the danger of letting cognitive decline remain unaddressed. The other lays out the thought process of a perfectly sharp retiree who wants to address the long-term potential for cognitive decline.
Both scenarios point to the foundational role of healthcare and finance power of attorney documents. In a follow-up article, I’ll share additional approaches and resources for addressing both mild and severe cognitive decline.
Painful as these topics are, their relevance is widespread. Consider the sheer number of aging people. According to the Alzheimer’s Association, the risk of dementia increases with advancing age. The population of Americans aged 65 and older is projected to grow from 58 million in 2021 to 88 million by 2050.
Then there’s the potential for abuse, including financial abuse. According to the National Council on Aging, up to five million older Americans are abused every year, and losses specific to financial abuse are estimated to be $36.5 billion dollars annually.
Hard as it is, families need to watch for signs of cognitive decline and be ready to have difficult conversations.
One spouse covering for the other
This real-life example (with a changed name) demonstrates the need for a power of attorney for healthcare and finance. Lucille was 80 when her husband noticed her memory “slipping.” She became routinely irritable. She would forget where she placed things or that there was food cooking on the stove. She was paranoid, thinking things were being taken from her because she couldn’t find them. She stopped driving, ate poorly, and started making notes on just about everything.
However, Lucille’s memory loss and confusion was not obvious to the extended family. Her husband had become an expert at covering the gaps, responding for her, and managing her day-to-day needs. When he died suddenly, the family quickly saw how significant Lucille’s decline was: she could not manage medicine, would become confused on time, day, and location, and started to have some difficulty verbalizing thoughts.
Everything indicated she needed some significant help. Now the family had to scramble to try and find the resources most appropriate for her needs.
That’s hard enough—but now consider how much harder it is when no properly executed power of attorney for healthcare and finance is in place. In that case, guardianship legal proceedings may be necessary before meaningful intervention can be taken. Guardianship is the drastic step of removing an individual’s rights and assigning them to another individual to act in the ward’s best interest.
Far better is to have power of attorney documents in place ahead of a major decline. Then, trusted agents can act on behalf of an individual in ways the person would want, so long as those wishes don’t run afoul of the law. Taking the time to execute power of attorney documents for health and finance is critical for every adult.
Proactive planning at retirement age
Juanita is 65 years old. She is divorced and has three grown daughters. Juanita is fiercely independent. She was a C-suite executive for many years, built a retirement nest egg, and after she retired, moved to Wisconsin to be near her children and grandchildren.
Juanita is as cognitively sharp today as she was in her 20s. She purchased a long-term care insurance policy years ago in the event she ever needs more extensive care. Her power of attorney documents are complete, and her agents and doctors all have copies. She has a financial advisory team that she meets with annually to review her investments and financial plan to make sure she is on track. She has talked with her agents and children about her healthcare needs/wishes, her thoughts about long-term care and her financial picture. She wants to live independently, control her finances, and handle her medical care for as long as possible, but she understands she may need help one day and the best way for her to ensure her wishes are followed is to communicate them, and communicate them often!
Juanita is following a pattern of proactive planning that more and more people are engaging in today. Her willingness to do that planning and communicate with her family will be tremendously helpful if she experiences a cognitive decline. This way, her family and advisors will know and understand her wishes.
Still, even with proactive planning, addressing cognitive decline is very difficult for families. Her daughters should be aware of warning signs to look out for, such as:
- Difficulty walking, balancing and mobility
- Noticeable difference in dexterity
- Confusion
- Changes in mood
- Unexplained bruising
- Forgetfulness
- Leaving burning stove unattended
- Spouse answering for the person, minimizing behaviors
- Hoarding
- Failure to manage medications
- Poor hygiene
- Change in sleep patterns
- Inability to attend to housekeeping
- Poor diet
- Late payment notices, collections
- Unsafe driving
- Falling victim to fraud or exploitation with finances, products, or services
If cognitive decline is suspected, time may be of the essence. There are sometimes treatment approaches that can slow that decline. If physical decline is also a concern, remedial measures should be taken quickly to improve safety.
Difficult conversations
It’s much more challenging to have difficult conversations with someone in Lucille’s situation than someone with more mild decline. But regardless, conversations need to happen.
- Be sensitive about when, where, and how they take place. Late afternoons and evenings are often not best, particularly if the loved one experiences sundowner’s syndrome—a state of confusion occurring later in the afternoon and night often found in individuals with dementia or Alzheimer’s.
- Being patient is critical. Include close friends and family if appropriate. Avoid criticizing or pressuring. It’s important to be sensitive and listen carefully to the fears and concerns the loved one may have.
- Deal with topics a piece at a time so that the conversation does not become overwhelming. Reassure the person of your concern that they are safe and cared for. Try to understand what their hopes are for the future, and how they envision their aging lifestyle.
Once you have had the conversation, you can move into the next stage of developing a plan for the right support depending on the needs. Not having the conversation or waiting until the situation is dire, as in the case of Lucille, is risky.
Be aware of resources
In today’s world there are many options that can be explored that allow for greater individual autonomy while still meeting needs caused by a cognitive decline. In the next article, we will explore a variety of resources available to families as they navigate the needs of a loved one suffering from mild to more severe cognitive decline.
