Memory Loss and Money: How to Protect Your Parents’ Finances When They Can’t
September is World Alzheimer’s Month, pushing memory loss and brain health to the forefront of many conversations, campaigns, and social media posts. Supporting parents who suffer from memory loss can be a tricky balancing act. While you want to respect and support your parents’ autonomy and wishes for as long as possible, good intentions may result in your parents losing thousands of dollars to scams, over-giving, or exploitation. According to a recent FBI report on senior fraud, the average loss per individual was $18,246 in 2021, with some individuals losing over $100,000. So, how can you protect your parents’ finances from your parents?
Make a Plan Ahead of Time
Taking over the management of your parents’ finances can prick a lot of emotions. If you can, open up the conversation well before it’s time to take over, and remember to keep compassion at the forefront of your communication. Let your parents know that you love them, value their wishes and autonomy, and want to help protect their finances. It may also help to bring siblings and a financial advisor into the conversation to create a supportive environment for everyone involved.
In order to manage your parents’ finances, you’ll need legal permission and a full inventory of their bills, accounts, and assets. Your parents will need to name you as their durable power of attorney so that you can manage their money for them. If they’re not mentally competent and unable to sign a POA document, you’ll need to go through court and be named their conservator. Next, ask your parents to help you create a comprehensive list of their accounts (with user names and passwords), bills and due dates, and assets. If they haven’t already included this information in their will, now is a great time to add it. If they’re not able to remember all of their financial information, you can use your power of attorney status to get permission to access their accounts. You may also find it helpful to consult an elder care lawyer to learn what documents you need in order to steward your parents’ finances most effectively.
Ease Into the Transition
Giving up control of your finances is understandably difficult, but you can honor your parents’ independence while helping to keep an eye on things. There will likely be a period when your parents can manage some of their finances, and you can preserve their autonomy for as long as possible by simplifying their accounts and setting up protective measures.
You and your parents may find a joint bank account a good middle ground. Automate as many bills as possible to minimize the possibility of missing a payment. Have the statements sent to you as well so you can catch any suspicious activity or overdue payments before they cause harm. You can also ask your parents how they feel about setting up a trust to protect their assets. Irrevocable Trusts are often used to help seniors qualify for healthcare coverage and care facilities while protecting their assets. Revocable Living Trusts can be equally useful to protect your parents’ assets while making it difficult for a family member to take advantage of them financially.
If you feel your parents are mentally at a place where new information won’t be overwhelming, consider educating them on how to spot scams like requests to wire money, internet pop-ups, and even emergency calls from scammers impersonating family members. If you’re worried that their cognitive state leaves them particularly vulnerable, you can still help them maintain independence without overburdening yourself by using third-party resources. Most major cell service providers offer free and paid versions of call-blocking apps that can help screen spam calls. Set up spending alerts for their debit and credit cards, help them set up a Social Security account to protect against identity and medical benefit theft, and shop around for a service to help monitor all financial accounts for overspending, even if your parent is the one doing the spending (like excessive giving to charities or family members). You can also ask their financial advisor to help audit their accounts to ensure they haven’t been sold any inappropriate investments.
Know the Signs
Finally, learning how to recognize the signs of memory loss and elder fraud can help you protect your parents’ finances before it’s too late. Watch for missed or overdue payments, uncharacteristic purchases, missing money, confusion and forgetfulness, and unusually shy behavior or a general hesitancy to talk about money. There can often be a lot of shame around falling victim to a financial scam, so it’s important to let your parents know that you’re there to help, not to judge or get upset.
Don’t Be Afraid to Ask for Help
Caring for parents with memory loss is a difficult undertaking. It can be frustrating, taxing, and isolating, all on top of the emotions of seeing your parents grow older and deal with Alzheimer’s or dementia. You’re not alone, and we’re here to help you and your parents manage your finances with peace of mind. Reach out to us to learn how we can facilitate a family conversation about finances, manage investments, help establish a trust, and more.