When Dementia is Present: Preparing and Protecting Family Wealth

Sara Craven
Tragically, developing Alzheimer’s disease or another form of dementia can rob families of the joy of the golden years. According to the Alzheimer’s Association, every 67 seconds someone in the United States develops Alzheimer’s. Because on average women live longer, they are even more likely than men to develop dementia – almost two thirds of Alzheimer’s victims are women. The Association recently reported that of the 5.3 million Americans who have that disease, 4% are younger than 65 (Alzheimer’s Association Facts and Figures 2015, www.alz.org).
 
Witnessing a loved one’s loss of cognitive vitality is devastating. Facing the realities of the situation is emotionally wrenching. Among the early signs of dementia is difficulty managing day-to-day financial matters, such as keeping track of bills. If you suspect this difficulty in a family member, taking a few very important steps may help protect them and their family. 
 
If and when recognizable symptoms present - or the individual is diagnosed - gather your loved one’s professional team. Assuming there is an estate plan in force and a team of both estate attorney and wealth adviser in place, a thorough review and potential revisions can begin. Ideally the framework has been established prior to symptoms arising. There are important relationships and supporting documents to affirm. In addition to traditional trusts, some key operating pieces now become the important focus:
 
Durable Power of Attorney:  allows another individual, ideally a trusted family member or friend, to manage the person’s financial and other affairs.
 
Power of Attorney for Health Care:  names a similar trusted person as health care agent to make the potentially difficult decisions that will be coming. 
 
Living Will or Advanced Directive:  expresses guidance as to their end of life decisions. 
 
Will:  names an executor to manage the estate, and integrates the trusts or articulates estate distribution plans. 
 
Trust and estate attorneys can appropriately revise an existing estate plan and prepare necessary legal documents. He or she can also draft additional trusts and recommend strategies designed to protect the family's assets and improve the disabled relative’s chance to seek government benefits. Once executed, original legal documents should be securely stored, the most secure storage option being a bank safety deposit box. Digital copies can also be made and stored on a flash drive. Wherever and however you store them,  it’s vital that you tell a family member or friend where the information can be found.
 
With the durable power of attorney in place, a wealth adviser can start by meeting with the party and his or her designee to review the long term financial projections. It may be necessary to plan for higher medical costs and adjust other assumptions for the financial needs of the healthy spouse. Financial stress can be reduced by planning ahead for care costs. On an ongoing basis there may be tax avenues to pursue, which the wealth advisor and parties’ CPA will address. 
 
Finally, it is critical to review insurance policies.  In force long-term care insurance should be reviewed in detail to understand benefits and timing. And if the affected individual is younger than 65, a workplace disability insurance or Social Security disability income may apply, cushioning the potential loss of earned income.
 
Though individuals with early stage dementia may still be able to address the planning changes needed at this point, it is ideal that couples put these plans in place while they are still healthy. The point is, we don’t know what health conditions we’ll face as we age.  By developing a plan and reviewing it periodically, stress is lifted and the whole family can achieve greater peace of mind, knowing the plan is ready to activate if needed and your wishes are understood. 
 

This information has been developed internally and/or obtained from sources that Sand Hill Global Advisors, LLC (“SHGA”), believes to be reliable; however, SHGA does not guarantee the accuracy, adequacy or completeness of such information nor do we guarantee the appropriateness of any investment approach or security referred to for any particular investor. This material is provided for informational purposes only and is not advice or a recommendation for the purchase or sale of any security. This information reflects subjective judgments and assumptions, and unexpected events may occur. Therefore, there can be no assurance that developments will transpire as forecasted. This material reflects the opinion of SHGA on the date made and is subject to change at any time without notice. SHGA has no obligation to update this material. We do not suggest that any strategy described herein is applicable to every client of or portfolio managed by SHGA. In preparing this material, SHGA has not taken into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision, you should consider, with or without the assistance of a professional advisor, whether the information provided in this material is appropriate in light of your particular investment needs, objectives and financial circumstances. Transactions in securities give rise to substantial risk and are not suitable for all investors. No part of this material may be (i) copied, photocopied, or duplicated in any form, by any means, or (ii) redistributed without the prior written consent of SHGA.