Cognitive Decline: At What Point Should Financial Affairs be Turned Over to Someone Else?

Any financial planner will tell you, cognitive decline can become a serious issue for their older clients. Sometimes it happens gradually over time, and for some people, dementia symptoms can hit suddenly and much earlier than expected. The fact is, most of us who are fortunate enough to grow older will experience some level of cognitive decline in our lifetime. Not only can this affect our health, wellbeing, and safety, it can also have an impact on our financial security.

Not addressing this can put you at serious risk. Someone should be watching your accounts carefully for changes, withdrawals, and fraud. You will also need to ensure your bills and taxes are paid and that your insurance policies remain current. The list varies, but consider everything you handle now and recognize that chances are someone will need to take all of it over for you someday.

One way to protect yourself and your family is to commit to turning over your affairs for someone else to manage for you when the time comes.

When should you make the decision to turn over your affairs and at what point should you turn over your financial management?

Because you can’t predict when cognitive decline can strike you, it’s best to put a plan in place as soon as possible and revisit that plan regularly to ensure it stays updated. While some people remain mentally sharp into their nineties, it’s not entirely uncommon to begin having some impairment as early as your fifties.

You might be wondering how you will know it is time to hand over your affairs. Both you and your loved ones should look out for changes that are unusual for you. You find yourself in overdraft and that’s never happened to you before or you forget to pay a utility bill or get a disconnection notice. You might also notice disengagement or a lack of interest in managing your finances. You could find that you’ve fallen prey to scam artists who target older people for donations to sham charities. You may even start to feel like you are being taken advantage of by caregivers or loved ones.

Who should you appoint to handle your financial affairs when the time comes?

Ideally, you have someone you trust to take on the role of Power of Attorney for finances who also has the aptitude, willingness, and close geographic proximity to handle your financial affairs.

Many people expect that their spouse or a sibling will play this role, not taking into consideration that this person is older or close in age and may be facing cognitive decline as well. People with adult children often assume they will automatically step in and handle things, but if the relationship is strained, the person is irresponsible, or they have young children, a demanding career, or live a long-distance away, they may not be able to effectively manage your affairs.

If you are single or you don’t have someone that you trust for this role, you have options. There are  trust companies who provide the service of  managing  your finances for you — cash flow management, monitoring your credit, paying your bills, and more. They provide professional management and record keeping for you.   The cost can be small relative to the cost of errors, mistakes, or even fraud.  For those who don’t make decisions for themselves in advance of cognitive decline and are found to be vulnerable financially, , your affairs may be taken over by the government and you certainly want to avoid that if you can.

It’s important to work with your lawyer and financial advisor as soon as possible to get the process started. Your older self is counting on your younger self to step up and have a plan in place to be financially protected for your lifetime.

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