For many, the holidays are a time to gather and spend time with family. These gatherings can present an opportunity to assess how senior parents are faring. It is tough to know when you should step in and help your parents with their finances. You may go back and forth about when to take over. Deciding whether your parents still have the cognitive ability to manage their money is a difficult call to make. A report reveals why it may be important for you to get involved.
The Study Results
An analysis published in September 2022 showed that seniors with cognitive impairment are struggling to handle their financial affairs. Reviewing a survey of 8,800 men and women aged 65 and older, the researchers found that seniors continued to maintain control over their finances even when experiencing some sort of cognitive decline.
In the population studied, almost 14 percent of these older adults suffered from cognitively impaired nondementia (CIND). Another 6 percent were experiencing dementia.
The study reported that cognitive impairment problems disproportionately affected groups who reported having less education or who identified as a member of a racial minority group.
Does Your Parent Show Signs of Cognitive Impairment?
There are some signs that may indicate diminished cognitive ability. Watch out for the following if you suspect your parent is experiencing diminished mental capacity:
- Your parents are confused and get lost in familiar places
- Your parents may lose their train of thought throughout a conversation with you
- Your parents are more forgetful
- Your parents forget about important events (like birthdays, holidays, and doctor’s appointments)
- Your parents are making impulsive decisions
Are Your Parents’ Financial Resources at Risk?
If your parents have assets, you should take extra care to determine whether they have any cognitive impairment relating to financial management. The study found that many of the men and women surveyed had large amounts of money or property valued at more than $100,000.
“Risky” financial assets, like valuable stock portfolios, may be “particularly susceptible to mismanagement” in those with cognitive impairment, the researchers state.
What Can I Do For My Parents?
Ensuring that your parents are properly cared for as they age is a priority for many children. However, knowing what you can do for your parents’ finances if they have any cognitive impairment is hard. If you suspect your parents are having a difficult time managing their money because of a cognitive deficiency, or want to have a plan in place in case it becomes an issue in the future, make sure they have appropriate estate planning documents in place, particularly a power of attorney.
A power of attorney is a legal document giving another person (the agent) the legal right (powers) to handle certain financial matters on your behalf. What those powers are depends on the terms of the document. A power of attorney may be very broad or very limited and specific. Typically, in an estate planning and elder law setting, full powers are given to agent to handle any and all financial matters. A failure to have a durable power of attorney will often lead to an expensive court proceeding called a “guardianship proceeding” in order to have a legal representative appointed to manage the incapacitated person’s affairs.
It is essential to have a proper power of attorney while your parents have the legal and mental “capacity” to sign one. One a power of attorney is in place, you can contact their financial advisor, banker, accountant, and other professionals to ensure their finances are being managed properly.
To learn more about how the elder law attorneys at Kurre Schneps LLP can help, contact us to today to schedule a consultation.