What Are the Financial Perils of Dementia?

What Are the Financial Perils of Dementia?

Besides the changes to their physical and emotional health, people with dementia lose their capacity to perform the financial tasks of daily living.

In fact, this may be the first noticeable sign of the disease. Sadly, as the disease progresses, most people lose all ability to manage their finances on their own.

Some of the signs that your loved one could be experiencing difficulty with personal finances include trouble making change, paying for a purchase or calculating a tip; non-payment of bills; and lost payments or the tendency to write the same check multiple times.

If you’re observing an aging parent for signs, look for strange purchases on credit card statements or unexpected new merchandise in the home. Check for sudden changes in account balances; overdue payment notices; and discontinued utility, telephone and other services.

Next, take action: Here are some proactive steps to take if an elder exhibits signs of needing help managing financial affairs.

  • Visit regularly. Ask about phone calls the person has received and watch for a full mailbox. Large numbers of mailings from marketers or charities could indicate that the elderly person is on a “sucker list.”
  • Guard the mail and trash. Deposit outgoing mail in collection boxes or at the post office. Open a post office box for incoming mail. Shred personal documents.
  • Set up automatic bill payments. Suggest automatic online bill payments and check deposits. Having a centralized, easily monitored system for incoming and outgoing money can help provide protections from potential fraud.

Besides changes in physical and emotional health, people with dementia lose their capacity to perform the financial tasks of daily living.

  • Inventory key documents. Even if your loved one is unwilling to grant access to his or her financial accounts, you or another trusted person should know where all important documents are kept. This includes documents associated with investments, benefits, ongoing expenses and legal documents, such as wills or durable powers of attorney.
  • Use the National Do Not Call Registry. Call 888-382-1222 or visit This will help to limit phone calls from telemarketers.
  • Discuss hazards. Tell your loved one that it is never a good idea to divulge personal information in person, over the phone or online; or to hire someone who shows up at the door, unsolicited.

Family members and caregivers must plan ahead for a time when a loved one will no longer be able to make decisions. The most important thing is to build consensus on the delegation of financial decision-making and to establish trusts and other wealth-protection strategies before serious problems surface.

  • Financial durable power of attorney (DPOA): When someone becomes ill and incapacitated for a period of time, it is important to have an “agent” or “attorney-in-fact” authorized to make financial decisions on his or her behalf. A financial durable power of attorney is the legal document in which you designate your attorney-in-fact.
  • Revocable living trust: A revocable living trust (RLT) functions in much the same way as a will. An individual is appointed to administer the ill or incapacitated individual’s assets and outline how they will be distributed. In the event of incapacity, an RLT may be used to assign the responsibility for management of trust assets to another individual. To work effectively, the trust must be “funded,” meaning that assets are retitled from the original person’s individual name to the RLT.

These are just some ways to protect your loved one’s finances, should illness impair his or her ability to do so. A financial advisor can offer help in forging a more comprehensive plan.

This content originally appeared on

Medically reviewed in June 2018.

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