Financial Planning for Cognitive Decline: How a Financial Advisor can Help Secure Your Future
Bob and Linda had been married for 50 years, a loving couple who had weathered life’s ups and downs together. Bob, a retired accountant, had always handled their financial affairs with care and precision. But in recent years, Linda noticed troubling signs. Bob would forget to pay bills or mix up account passwords. His cognitive decline was becoming more evident.
Linda realized it was time to step in and take proactive steps to secure their financial future and protect both of them as Bob's condition worsened.
1. Gathering and Organizing Financial Information
Linda started by collecting all the important financial documents and information:
Bank account details, including online login credentials.
Investment accounts, pensions, and Social Security statements.
Bills and recurring payments, like utilities and insurance.
Their estate planning documents, including Bob’s will and their powers of attorney.
She made a comprehensive list and stored it in a secure but accessible location.
2. Reviewing and Updating Estate Plans
Bob and Linda had created a will years ago, but Linda realized it was outdated. She scheduled a meeting with their estate planning attorney to review and update:
Durable Power of Attorney: Linda ensured she was designated to manage Bob’s financial affairs if he became incapacitated.
Healthcare Proxy: They formalized Linda’s role in making medical decisions for Bob.
Trusts: To simplify matters and avoid probate, their attorney recommended setting up a revocable living trust to hold their major assets.
3. Ensuring Linda Has Access to Accounts
Since Bob had always managed the finances, most accounts were in his name. Linda worked with their financial advisor to:
Add her name to joint accounts where appropriate.
Update account authorizations, ensuring she had full access to all banking and investment accounts.
Obtain login credentials for online accounts, creating a secure password manager to store them.
4. Simplifying Their Finances
Managing multiple accounts was becoming overwhelming for Bob. Linda consolidated their finances to make things easier:
Combined smaller accounts into one or two primary bank accounts.
Rolled over old retirement accounts into a single IRA for easier tracking.
Set up automatic bill payments for recurring expenses.
5. Reviewing Insurance Policies
Linda knew their insurance policies were crucial for financial protection:
Long-Term Care Insurance: Fortunately, Bob had purchased a policy years ago. Linda reviewed the benefits and ensured she understood the claims process.
Health Insurance: She confirmed that Medicare and any supplemental plans would cover Bob’s increasing medical needs.
Life Insurance: Linda updated beneficiary designations to reflect their current wishes.
6. Consulting a Financial Advisor
Recognizing that managing their finances alone might be too much, Linda sought the help of a trusted financial advisor. Together, they:
Created a plan for their living expenses, ensuring Linda would have enough to maintain her lifestyle.
Discussed strategies to protect their assets in case Bob needed long-term care.
Set up an emergency fund to cover unexpected medical or caregiving expenses.
7. Planning for Bob’s Care
As Bob’s condition progressed, Linda knew she might need outside help. She explored options for:
In-Home Care: Hiring a part-time caregiver to assist Bob at home.
Assisted Living or Memory Care: Researching facilities in their area in case Bob’s needs exceeded what she could manage.
To cover these potential costs, Linda considered Medicaid planning with the help of an elder law attorney.
8. Seeking Emotional and Practical Support
The emotional toll of caring for Bob was significant. Linda joined a caregiver support group where she could share her experiences and learn from others in similar situations. She also involved their children in discussions about Bob’s care, ensuring she had a support network.
By taking these steps, Linda felt more confident about their financial future and Bob’s care. While the journey was challenging, her proactive planning ensured that she and Bob could focus on cherishing their time together, knowing their financial and legal matters were in order.
Would you like to dive deeper into Medicaid planning, the role of a financial advisor, or emotional support resources?
Sources:
https://www.nia.nih.gov/health/legal-and-financial-planning/managing-money-problems-people-dementia
https://www.alzheimers.org.uk/get-support/daily-living/making-decisions-and-managing-difficult-situations/finances
https://pmc.ncbi.nlm.nih.gov/articles/PMC3799787/
Disclosure:
This material is provided as a courtesy and for educational purposes only. Please consult your investment professional, legal or tax advisor for specific information pertaining to your situation.
Advisory Services Network, LLC does not provide tax advice. The tax information contained herein is general and is not exhaustive by nature. Federal and state laws are complex and constantly changing. You should always consult your own legal or tax professional for information concerning your individual situation.