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June 4, 2020, 12:01 p.m. EDT

How to know when it’s time to step in and manage a parent’s finances

Actions you can take when an elderly parent’s cognitive decline impairs their money management

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By Jennifer Nelson


iStock

This article is reprinted by permission from NextAvenue.org .

In the months leading up to Ken Rupert’s dad’s Alzheimer’s diagnosis at age 71 in 2008, Rupert noticed his father having trouble taking care of normal money matters he easily did for decades. His dad forgot to sign paperwork transferring one brokerage account to another, couldn’t answer simple questions about his finances and had a ransomware scam on his computer.

“It was a pretty much a good sign that it was time to have ‘The Talk’ with my parents,” says Rupert, 55, a Hampstead, Md. financial strategist and author of “The Financial Black Belt’s Financial Self Defense Training Guide.”

Rupert ultimately told them that it’s an electronic world with people constantly trying to rip them off and that they needed a guardian at the gate.

According to a study published in Health Economics in 2019 , people in the early stage of Alzheimer’s disease face a heightened risk of damaging financial outcomes — likely due to their compromised judgment, memory lapses and vulnerability to fraud.

Also read: Have you started saving for your parents’ old age?

Signs of financial cognitive decline include not paying bills on time, not opening mail, excessive shopping, hoarding, taking longer to read and comprehend financial information and falling for financial scams.

Mild cognitive impairment and money issues

“Mild cognitive impairment — a state where someone has something going on that is a little more than the ‘normal age-related forgetfulness’ most everyone experiences in their 70s or 80s — tends to convert into early dementia within about three years,” says Stephen G. Post, director of the Center for Medical Humanities, Compassionate Care and Bioethics at Stony Brook University in Stony Brook, N.Y.

And Post says bad financial decision making is usually one of the first signs of things to come.

That’s why it’s essential for adult children noticing such signs to step in. A 2017 study by Merrill Lynch and the Age Wave research and consulting firm, found that 92% of caregivers handle financial matters for their loved ones.

You can start helping out by talking with your parent about what you’re noticing. That could lead to either assisting your mom or dad with money management or hiring someone to do so.

Not a one-time conversation

“Like talking about sex with our children, talking finances with elderly parents is not a one-time conversation,” says Patti B. Black, a Certified Financial Planner in Birmingham, Ala. “Start the conversation early and keep it going.”

Post recommends using a light and respectful tone. That helped Rupert, who says he handled his initial conversation in a way that made his parents feel like they were still in control by offering to watch things for them. He then added his name, with their permission, to their bank and brokerage accounts, credit cards and utility bills.

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