By, Nicole Ruggiano, PhD, MSW
Some time ago, I met a caregiver in Jefferson County named Mary who asked:
How do I get my husband to stop giving out our banking information? Sometimes I catch him on the phone talking about our finances and I have no idea who he is talking to or how much information he gave out and it scares me.
Oftentimes, one of the earliest signs that a loved one is developing dementia is when their difficulty in managing their finances becomes noticeable to others. For example, a person with dementia may be overspending to the point of financial instability. A person with dementia who is unable to manage the task of paying bills could have utilities cut off or large financial fees for late or missing payments. In other cases, like the one Mary was experiencing, a person with dementia may be at increased risk for financial exploitation or identity theft. As a result, many caregivers end up taking on the day-to-day finances for their loved one. Whether you are already managing you're loved one's finances or beginning to suspect that this task may be placed on you in the future, there are some things you should consider.
Assess Why Your Loved One is Struggling with Money Management
A diagnosis of dementia does not immediately make a person incompetent of managing their finances. In some cases, a person with dementia may have the cognitive ability to continue managing their finances, but they may need some support for specific challenges they are experiencing. For example, a person with dementia may be capable of make appropriate decisions about how they spend their money from day-to-day, but have difficulty remembering their PIN or have challenges signing their name due to arthritis. In such cases a bank card with a chip may be helpful, where they just tap their card to a payment device. Another example would be a person who can still manage paying their bills, but confuses the due dates and has difficulty paying them on time. In such a case, you may help your loved one set up automatic payments for their utilities where funds are drawn from their account on the same day every month.
Caregivers may look for signs of financial problems, as many people with dementia are hesitant to share their difficulties with financial management with others. Some signals include:
Establishing Power of Attorney
In some cases a caregiver may conclude that their loved one cannot manage their finances, even with some support. In such cases a power of attorney may be necessary. Establish a power of attorney as early as possible. Ideally, when your loved one is still competent enough to sign legal documents. For people with dementia who are not competent to signing legal documentation, preparing a power of attorney may require court procedures and also may be time-consuming if other family members disagree with the power of attorney plan. Essentially, a power of attorney is a legal status where one person gives another the authority to conduct business or make decisions on their behalf. This may be important for older adults with dementia for a number of reasons, but particularly for having caregivers support their financial management.
The establishment of a power of attorney can be as broad or as specific as a person wishes. For instance, the legal documentation can establish a power of attorney effective immediately or specify after the person is deemed incompetent. For example, a person with a recent diagnosis of dementia who is still managing their finances well may specify that their adult daughter or son cannot make financial decisions on their behalf unless their dementia progresses to the point where they are considered incompetent. A power of attorney may specify what types of decisions can be made. For instance, a person can give their adult child authority over medical decision making authority, but not for their finances. Even within financial decision making, power of attorney documentation can specify that the person can make decisions for them about daily banking but the person given decision making powers cannot sell their home.
A term related to power of attorney is representative payee. In this case, a person with dementia who is no longer competent to manage their finances can designate another person to receive their Social Security payments so they can manage their finances on their behalf. In Alabama, the law requires adults who are deemed legally incompetent to have a payee. Unlike a power of attorney, a representative payee cannot sign legal documents, have access to other types of income other than Social Security, or make medical decision on behalf of the person with dementia.
Credit Freezes and Fraud Alerts
In the case of Mary and her concerns about her husband giving out banking information, another caregiver in the project suggested that she freeze their credit. A credit freeze prevents anyone from opening a new credit account while the freeze is in place. All three credit bureaus, Equifax, Esperian, and TransUnion, offer credit freezes free of charge. You do not have to wait until fraud has already taken place and the person requesting the freeze can remove it whenever they would like to establish a new credit account themselves.
Another similar service that is offered for free is a fraud alert. If you expect that fraud has already taken place, establishing a fraud alert will make it harder for someone to open an account with your credit and can also provide you with a free credit report from all three bureaus. Fraud alerts are good for one year and can be renewed.
These services can be requested by contacting the credit bureaus directly:U.S. Federal Trade Commission website.
Stay Organized and Keep Updated Records
Family members who take on the legal responsibility for another's finances are obligated to act in the best interest of the person they are making decisions for. Hence, caregivers should make a plan that allows for transparency in the event that concerns or questions are raised. Some examples of good practices include:
Where can I go for help and advice?
Many lawyers in Alabama specialize in elder law and can assist with many financial-related concerns. There are also financial advisors who may provide assistance with things, such as estate planning and wills. The Alabama Department of Senior Services also offers a Legal Assistance Program that is non-fee-generating for Alabamians who are 60 years old or older and can give advice and assistance on a number of important issues, including powers of attorney, social security, income maintenance, guardianship, and elder abuse. It should be noted that the Legal Assistance Program does not assist with criminal matters or bankruptcy.
You can get information about legal assistance from your local Area Agency on Aging, which you can find by clicking here. Also, AARP offers advice on how to select a Financial Advisor.
This article is not intended to replace advice from a legal or financial expert. However, the content offered here - as well as the content on the links provided - can serve as a starting point for making a financial plan with your family and guide some conversations that will need to take place to put protections in place for your loved one and your family.
The Caregiving 101 is a resource for caregivers in Alabama who want to learn more about caregiving and dementia.
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