The time to act is before a parent becomes unable to handle personal finances. Here are steps you can take.
Most Americans don’t want to talk about the possibility that one or both parents could suffer from Alzheimer’s or some other form of dementia.
A Harris poll last month for the National Endowment for Financial Education says 70 percent of us aren’t “openly communicating about who will make financial decisions on behalf of an aging family member if they become unable to.”
The harsh reality is that an estimated 5.2 million Americans suffer from Alzheimer’s disease, including 200,000 under age 65. “By 2025, the number of people age 65 and older with Alzheimer’s disease is estimated to reach 7.1 million — a 40 percent increase,” the Alzheimer’s Association says. Alzheimer’s is the leading, but not the only, cause of dementia.
But we still don’t talk it.
“Frequently there is defensiveness, denial, embarrassment and sibling rivalry when entering into a dialogue between adult children and a parent concerning their finances,” NEFE president and CEO Ted Beck said in a press release. “Families need to come together, clear the hurdles that limit communication, and do what needs to be done with advanced planning before aging family members start to experience [episodes that indicate cognitive decline].”
You have to prepare before an aging parent loses the ability to manage money due to Alzheimer’s or any other cause. But how do you really do that? Here are six steps:
1. Search and deploy
There are many reputable websites to start with, from the Alzheimer’s Association to the Alzheimer’s Foundation of America to the federal government’s Alzheimers.gov. Check these out at the first sign of a parent’s dementia – or even before.
Besides offering detailed information in plain English, these sites can hook you up with local support groups, and NEFE urges you to seek them out – because meeting others who share your situation can bolster your spirits as well as give you practical tips.
You can also locate grief counselors. “If a parent’s cognitive decline is due to grief, reach out to a grief counselor,” NEFE says. “Share what you learn with siblings and/or other family members.”
2. Get down to business
“This also is a good time to do a financial inventory,” NEFE says. Once you bring together your siblings and other family decision-makers, talk about consolidating the ailing parent’s accounts into as few as possible – making it easier to track and manage expenses.
Sometimes this can take some detective work. We all can lose track of investments we may have squirreled away, from a forgotten bank account to an old stock purchase or a savings bond gathering dust in a drawer. While these may be small, they can really add up.
The Alzheimer’s Association also recommends gathering all financial paperwork in one place. This includes:
- Bank and brokerage account information.
- Deeds and any mortgage or ownership documents.
- Insurance policies.
- Monthly and outstanding bills.
- Pensions and other retirement benefits.
- Rental income documents.
- Social Security payment paperwork.
- Stock and bond certificates.
3. Be a legal eagle
Make sure that your parents’ will is up-to-date. If they don’t have one, get one. (Money Talks News founder Stacy Johnson describes how to get a will for cheap.)
Also make sure you investigate durable power of attorney and health care power of attorney, which can give you authority to settle financial and health care questions for an ailing parent if he or she loses the ability to do so. The parent must grant this power while still mentally competent. So don’t delay.
If you have legal questions, the National Academy of Elder Law Attorneys has an online directory where you can find qualified lawyers near you.
4. Have the talk
At the same time you’re being methodical, be compassionate. Remember all the conversations your parents had with you about being a responsible adult? It might be time to reverse the roles. And it may be a difficult talk.
“They have worked hard over a lifetime to accumulate their resources,” says NEFE’s Beck. “The aging family member may be apprehensive about relinquishing control of their finances.”
So be calm and be supportive. “Family members should be sure to involve the aging parent in the process of developing a plan where you are assisting them with their finances,” Beck says. “Remember, this is their plan, so be sure to follow their wishes.”
5. Make a plan and stick to it
Now that the decisions are made, it’s time to assemble a plan. And it’s easiest to execute when the time comes if responsibilities are shared and automated.
The family member in charge of the ailing parent’s finances can create an online calendar of bills to be paid each month. Another family member can monitor the parent’s accounts – checking for any unusual activity and making sure credit reports don’t reveal any identity theft.
Then there’s physical care. The more that can be handled by family members, less will be spent on hiring help, and it may delay nursing home care. Both can be expensive, from $19 an hour for “homemaker services” to $205 a day for a semi-private room in a nursing home, according to LongTermCare.gov.
“Have an honest and open discussion with siblings about a parent’s cognitive decline, what needs to be done, and what caregiving roles each family member wishes to play,” Beck says. “Set up a schedule for each sibling. Keep family members who do not live nearby updated with weekly emails or phone calls. Invite all siblings who wish to take on some responsibility to do so.”
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