Many adults are far too familiar with the ravages that Alzheimer’s disease can impose on a family. The gradual decline of a beloved parent or spouse is a painful thing to be a part of, and it forces some difficult questions. When should I start looking at long-term care? What can I do to keep mom safer at home? And perhaps the most difficult question of all: How do I safeguard this person’s finances when he isn’t able to do so himself?
This financial question is a thorny one, as no matter how objective we think we may be, money is an emotional issue. If you don’t believe it, just ask your financial advisor. Chances are she’s spent a good amount of time talking with clients about a whole lot more than just dollars and cents.
When you’re caring for an aging parent or a spouse who has a debilitating disease like dementia or Alzheimer’s, talking about money becomes even more difficult. These diseases rob people of more than their mental function. They also often rob them of their self-esteem and self-confidence.
Because of that, when the time comes to broach the topic of finances, it’s important to be as sensitive as possible. The last thing you want to do is make the person feel even less capable than he or she already does. So how can you talk about your loved ones’ finances with them while helping them maintain their dignity?
Bring the topic up early and often.
Unfortunately, many of us do our best to avoid talking about money until a crisis occurs. That could be anything - they’ve reached Medicare’s maximum for a hospital stay, perhaps, or your loved one suddenly has an event that makes a nursing home a necessity.
If you’ve never discussed money with your loved one before, you’ll have to do it all at once - and during a time when negative emotions like fear, sadness, and resentment could be running high.
Instead, try to broach the subject as early as possible. This way, you can learn what you need to about your parent’s or spouse’s finances in a relaxed setting and at a pace he or she is comfortable with.
Appoint a power of attorney.
Along with all the physical risks that dementia and Alzheimer’s bring, there are financial risks too. The elderly are often preyed upon by con artists and scammers, and these diseases can increase the chance your loved one will fall victim.
In addition, there’s the simple reality that your parent or spouse may lose their ability to make good financial decisions. A power of attorney gives an appointed person the legal authority to make financial decisions on behalf of the ill person.
Create a compassionate budget and financial plan.
It may sound strange to call a budget “compassionate,” but that’s the best word to describe it. When you’re helping a loved one with their finances, whether that means assisting only with large or complex purchases, or taking the reins entirely, you have to remember that you’re acting on behalf of that person. Therefore, it’s important to continue fulfilling their financial priorities as much as possible.
For example, maybe giving to charity was deeply important to your father. Now that you’re in charge of his finances, you may want to make an effort to continue giving, if it’s a possibility. The amount may have to change, but by honoring his values, you’ll be honoring him, too.
Money can allow us to experience small pleasures, too. If your wife used to love shopping and still shows interest, try to make room in your budget to allow for a shopping trip now and then. There’s nothing wrong with doing what you can to make your loved one’s years as happy as possible, as long as it doesn’t endanger your long-term financial plan.
Consider alternative means of funding your loved one’s financial needs.
If it turns out that additional funding sources may be needed to provide for your loved one’s care, consider looking into a life settlement. If your loved one has life insurance he or she no longer needs, that policy may qualify. If it does, then the policy can be sold on the secondary market for much more than its cash surrender value. The lump sum payout can be used for any purpose, like funding the care for your loved one.
To find out more, read our post “Using a Life Settlement to Pay for Healthcare Costs.”