Cognitive Impairment and Managing Finances

People often start having trouble managing their finances several years before they are diagnosed with dementia. It is essential to put systems in place to help protect their financial situation; however, taking over this responsibility is not always easy.

Signs that your loved one may be having difficulty managing their money often involve unusual or new financial activities such as :

Difficulty balancing their accounts or having an overdrawn account
Forgetting to pay their bills, paying bills multiple times, or paying an amount different from the amount due
Difficulty determining change or paying for a purchase
Unusual purchases or credit card charges
Large or frequent withdrawals or transfers
Stacks of mail and overdue bills

There are numerous reasons why your loved one may resist having someone help manage their money. A few of the more common reasons are:

Denial - they do not acknowledge that they have a problem with their memory and that it is impacting their ability to manage their finances
Cultural - they do not discuss finances with their children or other family members. It is a private matter, and others do not need to know.
Loss of Independence - they have been paying their bills for a lifetime, and giving this up is a sign of losing their independence.
Embarrassment - they are embarrassed that it is difficult to perform simple tasks and embarrassed to ask for help.
Paranoia - suspicion often accompanies dementia, and they may not trust someone to take over their finances.

Considerations

Depending on the degree to which you are managing your loved one’s finances, you may need legal authority such as a power of attorney. Learn about power of attorney here.
If you are managing finances or legal affairs, you may want to use a tool like Advocord for tracking and managing legal requirements.
Consider hiring a fiduciary or other professional if the situation is complex.
If you have siblings or others involved in the care of your loved one, keep them informed of decisions.

Getting Involved

Your loved one’s willingness to accept assistance, state of cognitive impairment, and your legal authority will determine your level of involvement. There is no single approach, so assess the situation frequently and adapt to the current needs.

Are there aspects of your loved one’s finances that they manage well? If so, let them continue with those specific tasks while you take over others.
Have them add you or another trusted individual to their accounts.
Set up automatic payments and online billing. Let your loved one know that this is the preferred payment method, and they no longer need to write checks.
If your loved one insists on writing checks, see if they would consider doing it with you on an agreed-upon schedule, such as when you visit.
Have physical bills sent to your address. If your loved one questions you about this, tell them they have credit on their account, which is why they are not getting bills.
Consider opening a separate account with you as trustee, power of attorney, or “for the benefit of…” You may want to keep limited funds in an account your loved one can access.
Ensure they have a set amount of cash available and know its location.
Provide prepaid credit cards or True Link to limit purchase amounts.
Minimize the spending limit on credit cards or cancel cards.
If your loved one regularly goes to a local bank, inform bank tellers of your authority and establish an alert system for withdrawals.

Regardless of how involved you are in the financial matters of your loved one, ensure that you are always respectful and help them to feel independent and part of the decision-making process.

Learn more about identifying and preventing Financial Fraud and Exploitation.