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Managing Finances with Dementia

Dementia can significantly impair cognitive abilities, making financial management increasingly challenging. Early planning and intervention are crucial to protect the individual’s assets and prevent financial exploitation.

Early Planning is Key

Ideally, financial planning should begin while the person with dementia still possesses sufficient cognitive capacity. This allows them to actively participate in decisions and express their wishes. Key steps include:

• Power of Attorney: Designate a trusted individual (or individuals) as durable power of attorney to manage finances on their behalf. The power of attorney should be established while the person is still capable of understanding the document.
• Reviewing Accounts: Identify all bank accounts, investments, and insurance policies. Simplify accounts whenever possible.
• Creating a Budget: Develop a realistic budget outlining income and expenses. Consider automating bill payments to avoid missed deadlines.
• Estate Planning: Update or create a will, trust, and advance directives to ensure assets are distributed according to their wishes.

Ongoing Management and Monitoring

As dementia progresses, ongoing monitoring and support become essential:

• Financial Oversight: The designated power of attorney should diligently manage finances, maintaining accurate records of all transactions.
• Fraud Protection: People with dementia are particularly vulnerable to scams and financial exploitation. Monitor accounts for suspicious activity and consider placing fraud alerts on credit reports.
• Simplifying Finances: Reduce the complexity of financial life. This could involve closing unnecessary accounts, consolidating investments, and using prepaid debit cards for discretionary spending.
• Professional Assistance: Consider consulting with a financial advisor, elder law attorney, or geriatric care manager for guidance and support.

Practical Tips

• Limit Access to Cash: Reduce the amount of cash readily available to minimize the risk of impulsive spending or theft.
• Monitor Mail and Phone Calls: Screen mail and phone calls to identify potential scams.
• Safeguard Important Documents: Keep financial documents in a secure location.
• Regular Communication: Maintain open communication between the person with dementia, family members, and caregivers regarding financial matters.

Managing finances with dementia requires a proactive and compassionate approach. Early planning, diligent monitoring, and professional guidance can help protect the individual’s financial well-being and ensure their needs are met throughout their care journey.

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