It is tough to know when you should step in and help your parents with their finances or if you should at all. You may go back and forth about when and if to take over or even offer help. Deciding whether your parents still have the cognitive ability to manage their money is a difficult call to make. A recent 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 a large estate, you should take care to determine whether they have any cognitive impairment. 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, consider the following.
- Get Them Screened for Cognitive Impairment — Depending on what symptoms you're seeing, a first step may be to confirm your suspicion with a cognitive impairment screening. Typically, patients are asked simple questions about themselves and their surroundings, including their name, address, the time, and to recall information. Learn more about cognitive assessments from the Alzheimer’s Association.
- Find Financial Counseling — You may need professional assistance to ensure your parents’ affairs are handled appropriately. You may want to speak to an accountant and/or CFP if your parents’ estate is extensive and includes many assets.
- Have Them Update or Create a Financial Power of Attorney Early — This simple estate planning tool can ensure you can assist your parents with their finances. Without it, if a person is deemed incompetent, the court may have to get invovlved to appoint a person as guardian or conservator (depending on your state's laws).
At Linville Law Office, PLLC, we believe the best planning is pre-planning. Planning under stress or with a medical diagnosis is not impossible, but always harder. Sometimes clients want this process to be between them and their attorney, but we are always open to multigenerational discussions and information sharing, as appropriate. Give us a call today and you can have the gift of peace of mind in time for the holidays: 704-323-6712.