with Elizabeth Loewy,
Co-Founder and COO of EverSafe
Q: What should an adult child do to protect an older parent from financial exploitation, if the parent has been diagnosed with Alzheimer’s disease?
A: It’s a challenging situation, because you are balancing personal dignity, legal issues and financial safety. Individuals who are diagnosed with dementia are not deemed incapable of making legal and/or financial decisions just by virtue of the diagnosis. It’s possible that even with dementia, they have sufficient decision-making capacity to enter certain contracts or even make a change to their estate plan.
With the parent’s permission, I would want more information from the doctor about their capacity—especially with respect to their ability (or lack thereof) to understand financial matters. If it’s the doctor’s medical opinion that the parent is still capable of understanding their finances, I would ask whether he or she had already taken care of any advance planning. Of course, having a conversation with parents about planning for the future is always best to do—before there’s a crisis.
This is an important conversation. As part of it, I would work with the parent to make a complete inventory of all their different financial accounts, credit cards, and investments. I’d also want to know whether the parent has a durable power of attorney in place to assist in legal and financial matters in the future.
A durable POA withstands incapacity—so if the parent executes this document when they are well enough to understand it, the agent (also called the attorney-in-fact) could help them plan for the future. As a part of that planning, the parent should consider using a fraud-monitoring service to protect his or her life savings (bank, investment, credit card, credit and real estate data), with alerts sent to designated trusted individuals who can serve as an ‘extra set of eyes’ in monitoring. A caring, adult child might be ideal for that role. Having more than one individual receive those alerts would provide additional protection.
With respect to fraud prevention, an adult child can tell parents about current scams and what to watch out for, so they remain financially independent for as long as possible.
If the parent is no longer able to understand his or her affairs, and nobody else has that authority—such as a joint account holder, successor trustee or durable POA—the adult child might have to consider moving for guardianship/conservatorship and ultimately take a more active role in managing their parent’s finances.