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Early-Stage Dementia: Protecting Elderly Parents’ Assets

Noah Bandt
By Noah BandtAugust 22, 2020

Struggles with personal finances may be an early sign of Alzheimer’s disease or another form of dementia. Yet nearly half of seniors 65 and older manage their finances entirely on their own, according to an AIG survey of 2,200 adults. This makes them vulnerable to elder financial abuse, a fast-growing form of senior abuse.

Elderly people with early-stage dementia are especially vulnerable to fraudulent activity, according to the National Adult Protective Services Organization (NAPSO). Learn the signs your elderly parent is having trouble managing their money and steps you can take immediately to protect their assets.  

Early-stage dementia and money management: signs of struggle

People with mild cognitive impairment may be able to do simple tasks like paying for a routine expense. However, they often have trouble with more complex tasks such as balancing a checkbook or calculating a tip. Memory loss and difficulty staying organized and concentrating are also early signs of dementia that can affect your parents’ abilities to handle their finances.

Be alert for these signs your parents are having difficulty managing money:

  • Trouble with common financial skills such as balancing a checkbook, calculating change, or organizing financial documents
  • Forgetting to pay rent or bills; utility service disconnection
  • Missed calls from the bank
  • Money missing from their bank account
  • Unusual purchases or merchandise at home
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10 tips to protect your aging parents’ assets

There are several simple and more complex steps you can take when your loved one is in the early stages of memory loss to help protect them financially. These include the following:

  1. Talk to your loved one often and as soon as possible about their wishes for the future and your desire to help. (See below for four tips on starting the conversation.)
  2. Block scammers from calling. Add your parents’ home and mobile phone numbers to the National Do Not Call Registry.
  3. Sign your parents up for free credit reports. Federal law requires each of the three nationwide consumer credit reporting companies — Equifax, Experian, and TransUnion — to give you a free credit report every 12 months if you ask for it.
  4. Help set up automatic payments. Work with your parents to have their utility bills, mortgage payments, and credit card payments taken care of automatically.
  5. Agree on a daily spending limit on credit or debit card purchases. If overspending continues, consider using preloaded bank cards instead of regular credit or debit cards.
  6. Weigh the pros and cons of opening a joint banking account with your parents.
  7. Learn more about their estate. Ask your parents about their estate and their goals for the future. What were their financial decisions and what guided them? This can help you ensure there aren’t unaccounted for assets that might be vulnerable.
  8. Discuss simplifying their financial portfolio. Enlist the help of a certified financial planner to discuss the various ways your parents can simplify their portfolio and how to set aside money for future long-term care.
  9. Designate a durable power of attorney (POA)by talking with an elder law attorney. A durable POA can act on a person’s behalf financially and legally when they are no longer able to do so. It can help people with dementia and their families avoid court actions that could remove control of a parents’ assets, according to the National Institute on Aging. Send this document to any company, organization, or facility your parents use so you can communicate with them on your parents’ behalf.
  10. Establish a living trust and designate a trustee. A living trust provides guidance on managing your parents’ estate. The trustee follows these instructions when a parent with dementia is no longer able to manage their affairs.

Signs of elder financial abuse or fraud

Even if family members are vigilant, scammers can still take advantage of seniors with memory loss via telephone, e-mail, and in-person scams. Con artists can be very convincing. They know how to apply pressure to get seniors to act quickly.

It’s not uncommon for seniors to give their credit card information over the phone to someone pretending to be a grandchild in need. Sometimes, the person committing elder financial abuse is a family member or “friend” taking advantage of a senior’s diminishing cognitive ability.

Be alert for:

  • Strange-looking signatures on checks or legal documents
  • Talk or evidence of unexplained money transfers
  • Sudden changes in your parents’ will
  • Changes to the mortgage, loans, or other major financial agreements
  • Missing jewelry or cash
  • Newly established lines of credit
  • High numbers of phone solicitations or telemarketers
  • Repeated calls from unknown numbers at the same times of day
  • Written threats of extortion
  • Non-FDA approved medical devices or procedures such as hearing aids
  • Unnecessary home or auto repairs such as for hail damage or driveway surfacing
  • Unusual requests for sizeable charitable donations

Where to report financial abuse of the elderly

If you think your parent has been the victim of a scam, you should take action quickly. You can notify:

4 tips to talking to your parents about safeguarding their finances in early-stage dementia

Remember, despite your best intentions, your parents still have the final say on money matters until they can no longer make decisions for themselves. Try these tips to start a conversation about your parents’ finances and avoid elder financial abuse:

  1. Start the conversation as soon as possible. Dementia progresses at various rates, so you may not know exactly when to step in. Talking about dementia and money management will be easier in the earlier stages.
  2. Keep it simple and about them. Emphasize you want what they want and are simply there to help avoid financial pitfalls common among people with memory loss. Explain how a durable power of attorney they choose can help protect their hard-earned assets and avoid financial exploitation later on.
  3. Give them some time. Becoming emotional or defensive is expected with a subject as sensitive as struggling to manage your finances well. Your parents may not realize or want to accept they’re having difficulties. They may accuse you of trying to take control of their estate. When emotions get out of control, give your parents time to process your concerns and suggestions. It may be helpful to have a few meetings over a few weeks to discuss needed steps
  1. Consider including a third party. Even if they’re experiencing memory problems, your parents are still your parents and want you to act accordingly. Discussions may go more smoothly if you include a neutral third party, such as an elder law attorney or financial advisor. These professionals can add another layer of protection for your elderly parents’ assets.

Sources:

AIG Live and Retirement. “AIG plan for 100 elder financial abuse survey.” https://www.businesswire.com/news/home/20190926005442/en/Seniors-Manage-Finances-Leaving-Vulnerable-Scams-Financial

National Institute on Aging. “Legal and financial planning for people with Alzheimer’s.” https://www.nia.nih.gov/health/legal-and-financial-planning-people-alzheimers

Federal Trade Commission. “Family emergency scams.” 
https://www.consumer.ftc.gov/articles/0204-family-emergency-scams

Noah Bandt
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Noah Bandt
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