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Dealing with Cognitive Decline
Old 05-28-2014, 05:55 PM   #1
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Dealing with Cognitive Decline

Prompted to start this thread by a column by Christine Benz on the Morningstar site today (How to Safeguard Finances Against Cognitive Decline) along with the Am I Old yet thread here on the ER board.
The column points out that one of 10 for men and 5 out 10 women will suffer dementia, and for the over 85 age group, 50%.
The column's premise is to explore what you can do in advance to protect your financial assets. Besides the standard POA and Health Directives, there is the vital issue of timing and who should get the authority. One of the "imponderables was rather to have a trigger event for the POA or leaving it open so it could be used immediately should there be a need.
Apparently complicating this decision is that HIPPA rules might prevent a physician providing the authorizing approval (if the trigger was a competency requirement) if they did not have on file the necessary approvals from you to release your health records.
In the article's comments section (some good stuff there), one poster mentioned that they were in their early 60's when they had the first of regular session with their children to discuss finances and the role the children could/would play. They now provide regular updates to their children and an annual review.
We have an "only" who has shown good awareness so far but is a long ways from having complete working knowledge of ETF's, MF, etc and the alternatives. Her hubby is solid and well above average in brain power (software engineer) but again has a multitude of other interests besides finance. We are both 66 and in good health. DW's has longevity in her family but as often said she does not care for the whys and wherefores of portfolio management. We have been thinking the perhaps when we were 75 we would have this conversation but now wonder if it should be sooner.

Question for the Board is how many of you have had this type of conversation with your child(ren) and at what age were you when you pulled back the curtains on your personal finances? How often do you discuss your financial issues and expectations with them ?

Thoughts and experiences are much appreciated.

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Old 05-28-2014, 07:16 PM   #2
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We're in our 50's and haven't had this conversation yet, but I will. Our kids are in their 20's, and I'm afraid if they knew how much we were worth we might not wake up tomorrow.

I'm an only too, and my father did have this conversation with me when he was in his 70's. He rattled off lots of names and numbers, I tried to take notes, and finished with: "oh well, everything you'll need is in the file cabinet in the basement.

10 years later, after my mom was admitted to a nursing home for Alzheimer's, and he'd had a stroke, LOTS had changed. Luckily his tax guy and attorney were very helpful and informative, but I still wish he'd put together some kind of guide book for me. I know it would be hard to keep updated, but I want to do this for my kids, so when they do have to take over they don't look like a deer in the headlights like I did.

It's not something I look forward to, because I remember how uncomfortable I was when I went through this with my dad. He was very uncomfortable with his mortality, which made me uncomfortable, and thinking about a time when he wouldn't be around was really too much. I don't know how you separate the emotions from the process, but it would help.

I only hope I go quickly and quietly like Maya Angelou. As her family said in their statement: "Her family is extremely grateful that her ascension was not belabored by a loss of acuity or comprehension." Having to manage the money for any length of time (I had to do it for 10 months) while one or both are alive but not able, is extremely stressful. I always wondered what I'd do if the $$ ran out. Thank God it never did.

I'll look forward to what others have to say.
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Old 05-28-2014, 07:26 PM   #3
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I don't want to sidetrack the discussion, but it has occurred to me more than once that the issue of cognitive decline is even more salient for those without children. How do we safeguard our future when we will have no one of sound mind and personal loyalty to be our stewards? It is very difficult to anticipate what we will need and when.
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Old 05-28-2014, 07:34 PM   #4
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We are not yet 50 (48, 46) and DD and DS are too young for this yet (17, 15), but we will start putting things in an organized fashion in the next year or two and then update it as needed. There is something called a 'death book' -- terrible term I know but first saw it on bogleheads and it's a good idea -- basically collecting all the key information/data in once place and making sure your heirs know where that is.

We will likely have the full conversation when our kids are in their 20s. My parents never did and when DD (age 60) passed suddenly and DM was a mess with grief it was very hard to get things settled. When DM finally allowed me (only child) to have some access to her accts she was in her mid-70s and also passed within a couple years of that.

Only saving grace in that was that mom put a POA in place when DD passed and it was a lifesaver when it was time for her, as we had to set up in-home care, hospice, etc and manage finances for a period of time. She was never forthcoming and we still had to scour her house for things like stray bank acts and life insurance paperwork.

DW has not had any discussion with the ILs, who are also mid-70s but in excellent health … I have suggested to her that she and her brother sit her folks down soon and get some detailed info as they have both been self-employed and have both business and substantial personal assets that would need to be addressed.

To the OP Qs, not yet, but we will once the kids are in 20s (and seem mature enough to deal with it) unless some health crisis pushes it forward. We would likely only update it as and if our wishes and plans changed.
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Old 05-28-2014, 07:59 PM   #5
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For situations where the kid(s) aren't personally skilled/interested in detailed financial matters and the overall management of a cognitively impaired parent's life, or just don't have time, there are professionals that can be brought into play.

A close friend and his brother neither wanted or had time to be attentive to their mom's plight as a senior with both physical and mental limitations. They lived in three different states, both sons employment involved travel, etc. A professional "elder manager" (I don't know the real name/title) was hired who had extensive expertise in retirement finances, nursing home selection and monitoring, etc. The professional even arranged for a service that monitored the mother's situation in person at the NH regularly and submitted written reports or called if necessary. My friend and his brother flew in to visit multiple times per year, meeting with the elder manager at those times. Phone calls and written reports supplemented the visits and covered both financial issues and the mother's health status.

I'm sure this took money and, in this case, money was available for a top notch nursing home and the additional services. Both my friend and his brother were loyal to their mom and seemed pleased to be able to ensure her well being despite giving up a chunk of their inheritance due to the expense. They were involved enough to ensure no hanky-panky or inferior results with either the finances or the care. While the situation did seem a bit arms length to me, it seemed to work for the three of them.

Because my son and his DW are super busy raising three kids (one with special needs) and so far successful careers in engineering, I can see where having a management service between them and the details of our care might be a wise idea. I think the search begins by contacting an elder attorney.
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Old 05-28-2014, 08:04 PM   #6
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I'm 55 and DW is 54, kids are 31 and 28. Haven't had the talk yet, but have told them that the talk is coming soon. It helped that the last time they were all over that we were discussing investments, saving for retirement and other financial topics and it appears that there is a common philosophy within the family regarding investing. This encourages me that the less comfortable conversation will go well when the time comes.

It helps that the kids realize what a mess FIL left behind when he passed in 2008. Even after being diagnosed with stage 4 lung cancer he WOULD NOT discuss finances with DW. We were lucky that he was willing to give us the password to his computer. We had to reconstruct everything from conversations with his lawyer, his Financial Adviser (who sold him an annuity AFTER he was diagnosed with cancer) and brokerage statements. A classic example of what NOT to leave behind.
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Old 05-29-2014, 07:26 AM   #7
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I've thought and have taken actions, some via my will, trusts for my DW and children that have involved my CPA, lawyer and one of the financial firms. I started doing all this in my mid 60's. A lot of what needs to be done is based on your net worth and how you want it used in your later life and distributed upon your death.

OK, this blog is supposed to be based on how your financial matters should be handled when dementia becomes a challenge; Tough question and my decisions will all be made based on one key word......trust. Elder abuse is a major problem in our society because money is coveted by those that don't have it. So, the 1st question is do/can you trust your children? Will they choose to "save" money by spending less on your care? Some have (friends children) so they have a larger inheritance. Can you trust your financial advosor? I know one that sold a million dollar annuity to an 80 year old women.....this woman trusted her financial advisor of many years.....her kids lost out big time....

In my case I believe I can trust my kids, DW, CPA and lawyer so I've set up a team....someone who is in charge and a special protector committee that consists of three individuals and the entire team has to meet once a year with the financial advisor.

Now.....I have a reasonably large net worth so I can afford to put this team together but it wasn't too expensive. My net worth is a few million but when it is split 4 ways upon my death, no one gets that much.

Let me get back to how this money is invested at some future date when it could be determined I have dementia.....it will be invested very simply in a combination of Vanguard index funds appropriate for my age. I'm a believer in Warren Buffet.....he has said that after he is gone his wife should have her portfolio in index funds.

Again, the key word is trust.....you want to be sure that your money is invested so you have the care you need late in life. You have to have check and balance and BE SURE a family member doesn't deny you a enjoyable late phase in life so they have a larger inheritance......I really am lucky......but I've created trust but verify since I've seen others abused......basically saying abuse is when decisions are made that are in the best interest of a financial advisor or a family member......I hope I didn't go too far off the purpose of this blog......I can't think of anything worse, however, then the financial elder abuse which does happen from time to time.
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Old 05-29-2014, 08:00 AM   #8
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I'm one of 5 kids and my father (early 80s) does a very good job of managing finances but I'm the designated person to handle them if he predeceases Mom or if he can't manage them anymore. I think that if, God forbid, Dad's mind were to start failing, he'd be reasonable enough in his lucid moments to execute the necessary paperwork. His brother has Alzheimer's and his SIL has no idea what they have or where, and he won't want that to happen. He keeps everything up to date in Quicken and says that any of us who have Quicken will be able to get the details.

On my side, I've been gradually moving everything over to a trust (lawyer has been slow about deeding the house into it but almost everything else has been moved). At the same time I executed a Living Will. I have 2 brothers who are accountants who can manage the trust when I'm gone; my only son is frugal and responsible but not very interested in managing money. DH is 75 and the same way.

I've also kept my affairs pretty simple. I have one checking account and 3 brokerage accounts, but no 401(k)s with old employers. The investments need to be reviewed regularly but there are no short positions, day trading, etc. that would need to be addressed immediately.
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Old 05-29-2014, 08:35 AM   #9
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I'm 66, my wife is 65. We haven't had a discussion with our kids. I have one daughter who kind of suggested that we should have LTC insurance. I replied with my short list of reasons to not buy (yet).

Our finances are extremely simple, we've burned off all the complexity since I retired. I want to leave my wife with a simple plan. None of the kids are investment pros, but any of them could leave the money in the Vanguard funds where most of it is today and just spend it down as needed.

For us, the bigger issue is that we've provided much more financial support for one of them than for the others. I had thought that should be reflected in an inheritance somehow, but haven't crossed that bridge.
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Old 05-29-2014, 09:25 AM   #10
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I plan to sit down and discuss financials with DD in details in the next couple of years. She is not interested in financial investments but is more than capable of handling things if my mind is gone or if I suddenly die. DW is not at all interested and very risk averse and if it's up to her she would put all the monies in a savings account or under the mattress.

Meanwhile I have specific written instructions (6 to 7 pages) in a sealed envelop in my safe with all account passwords, balances, credit card numbers, names and numbers of professionals as well as locations of legal documents such as wills, trusts, POAs, health care proxies etc... I update this annually and DW and DD know where to find it.
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Old 05-29-2014, 09:41 AM   #11
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Youbet thanks for that info. Didn't know those options existed. We have no children, there's a couple of nieces I would trust and like to help out financially. Given recent family history, almost afraid to ask.

To OP, one of the greatest gifts FIL/MIL gave us was a book of their wishes. Had personal wishes, POA, trust docs, attorney information.

They probably did that when they were 60(us 35). They never updated us as nothing changed. I compare their easy departure with the hell DF put our family through.
Good thread.
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Old 05-29-2014, 10:11 AM   #12
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I am 45, so I can give the perspective of being "the kid". I am the executor/POA etc for my parents (and my aunt who is childless), being the older daughter and also having a CFA charter. My father had "the talk" with me when I was in my late 20s and they retired (17 years ago). At Christmas every year, he tells me if anything has changed. My aunt talked to me about 10 years ago. They are 76 and 71 now, respectively.

My father's cognitive health is perfect, my mother is showing signs of Alzheimer's. My father deals with all the finances, so from that standpoint, things are covered. If something happened to my father first, I would definitely have to take care of the finances for my mother (although in reality, if he goes first, my mother will likely need assisted living anyway, unfortunately).

My family has always been extremely practical and open about money matters, so everyone makes sure everyone else will be covered. And it helps them all that they have someone who "does finance" for a living.
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Old 05-29-2014, 11:01 AM   #13
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I have been having an ongoing discussion with my daughter about my finances . I also wrote her a letter telling her were everything is and how to access it . I update the letter every few years . I just got back from visiting her & we discussed what to do with an inherited IRA .
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Old 05-29-2014, 11:29 AM   #14
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Gumby raises a question that is difficult to answer. Children or other relatives are not an automatic “go-to” for help with problems associated with aging. Much financial crime is carried out by family members and it is often difficult to monitor and detect.

What we all need is someone we can trust to carry out our instructions and manage our affairs if we become unable to do so. There are lots of pieces to this puzzle, but one thing for certain is it takes a long time to identify the individuals and build the trust, and this needs to be done before getting into the “what are the instructions” part.

From my experience managing the finances is not the most challenging part of this. Making choices that affect care and lifestyle are much more difficult and also more likely to raise conflict among different people involved. The financial conversation with the kids, or whomever else we choose to act in out interest, should follow and support the conversation about what we want done.
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Old 05-29-2014, 11:41 AM   #15
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Gumby raises a question that is difficult to answer. Children or other relatives are not an automatic “go-to” for help with problems associated with aging. Much financial crime is carried out by family members and it is often difficult to monitor and detect.
As part of my TaxAide "practice" I often sit in on seminars about elder abuse (which includes financial fraud). More than once I have heard that over 50% is perpetrated by relatives.
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Old 05-29-2014, 10:03 PM   #16
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My only input is don't assume that you or an aging person you care about will be able or rational enough to hand over the proverbial reigns when it is time. I have witnessed this very directly and also indirectly through work. The problem with cognitive decline is that it is gradual and often compensated for. Also, that the system declining is the system being depended on to monitor the situation. These in addition to the obvious fear and loss of personal autonomy that can result in direct denial.
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Old 05-30-2014, 07:03 AM   #17
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We are mid-late 50's and only child DD is early 30's. We had the financial talk about 2 years ago, after having to handle the finances for DH dad and mom. We realized then quickly that if something happens (could be a car accident and not necessarily old age) she needs to know. She is interested and a good money manager, so this was easy. We have her setup as a signee at the bank so she can pay bills for us if needed. She also has access to the safe deposit box.

We still need to do a "book" with passwords, account numbers etc. DH is not particularly interested in the day to day stuff, so this would be useful to him also should he survive me.

More recently have begun discussing funeral desires and health care desires but have not documented these yet.
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Old 05-30-2014, 11:10 AM   #18
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Gumby raises a question that is difficult to answer. Children or other relatives are not an automatic “go-to” for help with problems associated with aging. Much financial crime is carried out by family members and it is often difficult to monitor and detect.

What we all need is someone we can trust to carry out our instructions and manage our affairs if we become unable to do so. There are lots of pieces to this puzzle, but one thing for certain is it takes a long time to identify the individuals and build the trust, and this needs to be done before getting into the “what are the instructions” part.

From my experience managing the finances is not the most challenging part of this. Making choices that affect care and lifestyle are much more difficult and also more likely to raise conflict among different people involved. The financial conversation with the kids, or whomever else we choose to act in out interest, should follow and support the conversation about what we want done.
Being childless and having no close relatives, our "plan" is to buy into a CCRC at age 75 (DH will be 80). If one of us feels the other is losing his/her marbles sooner we would buy in sooner. For investments I'll keep my AA and use my 4 funds (BSV and BND for the bond portion, SDY and SPY for equities).

Some might say that 75 is too young, but the nearby CCRC has enough amenities and activities to keep us busy. The only thing it is missing is golf, which I can do on a public course if I choose.
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Old 05-30-2014, 06:25 PM   #19
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Wife and I went to watch this wonderful Indie movie last night Official Trailer for REDWOOD HIGHWAY on Vimeo and I guess one of the ways is go for a walk, a long one... (sorry it's off the financial end of things but more to life than just finances)
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