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Life Health > Long-Term Care Planning

4 Financial Planning Steps for Clients With Alzheimer’s

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Fiduciary Trust Co. published on Monday a white paper to help advisors address the planning needs of clients who have been diagnosed with Alzheimer’s or other forms of dementia.

“The reach and impact of Alzheimer’s is significant, affecting an estimated 5.3 million Americans diagnosed with the disease, as well as the more than 15 million who provide unpaid care for family members and loved ones,” Jody King, vice president at Fiduciary Trust Co. and author of the paper, said in a statement. “While the diagnosis is distressing for all involved, it’s critical to move quickly to confront the difficult questions and both devise a comprehensive care plan and update financial and estate planning documents to reflect new circumstances.”

The paper, “Memory Loss: Remember … to Plan,” outlined four steps for family members and financial planners who are caring for or advising someone with cognitive disorders.

First, they need to recognize the condition. Early stages of dementia are the most important to planners in particular, because this is when the client still has the legal capacity to make decisions about finances and care on their own. As a diagnosis progresses, the client may become more reliant on a caregiver or guardian.

Then the family needs to work together to develop a care plan — again, in the early stages of the disease so the impaired family member can participate in planning. Key decisions to be made are who will serve as caregiver (a family member or nurse?) and where care will be received (can the client stay in his or her home, or should plans be made to move to a nursing home or assisted living facility?).

“It may not be necessary to significantly increase the amount of care or supervision immediately, but a plan should be in place for when more care is needed,” King wrote.

The paper noted the importance of being realistic about the care a family member can provide. “All families should be aware of the physical and emotional toll of being the primary caregiver, with a nearly 40% incidence of depression in caregivers. Even if the affected loved one moves to a care facility, a family member may still play a significant role in monitoring care and providing for some needs.”

Organizing important information is the next step families need to take as they plan for an impaired family member’s illness. That includes assets — how much and where they live — other income like from a pension or Social Security, liabilities, insurance policies, contact information for key contacts like the family member’s accountant, lawyer and doctor, and digital assets like passwords and account logins.

Finally, families need to review all legal documents related to the care of their loved one to make sure necessary papers are in order, including a health care proxy; an authorization under the medical privacy law HIPAA, which may be included in the HCP; a durable power of attorney; revocable, irrevocable and special needs trusts; and a will.

An important aspect of reviewing legal documents is making sure appropriate people are named as fiduciaries. The paper suggested families consider a corporate fiduciary.

“Often naming a corporate fiduciary, either to act alone or with a family member, provides a sense of security knowing that the corporate fiduciary is experienced and knowledgeable regarding its fiduciary duty to act in the best interests of the beneficiaries at all times,” according to King. “In addition, the ability of the corporate fiduciary to provide consistent financial advice and wealth management across generations is attractive.”

This is also a good time to make sure beneficiary information is updated and correct. IRAs, qualified retirement accounts, life insurance policies and annuities should be reviewed, but King said it’s also important to review accounts where the impaired family member is named as a beneficiary on another person’s account.

Real estate may need to be transferred to the impaired person’s revocable trust or a nominee trust. King added that advisors should be cautious about not making “gifts of real estate or other assets that would potentially delay access to public benefits if it is anticipated that public benefits may be necessary.”

Accounts like cell phone and cable bills should also be reviewed. 

“A person diagnosed with Alzheimer’s disease or suffering from another form of dementia needs the compassion and empathy from loved ones, as well as from their professional advisors,” King wrote. 

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