A diagnosis of dementia or other cognitive issue can be devastating, for you and your family. While many people can continue to live happy and productive lives for years after a diagnosis, at some point there may be a time when you are no longer able to make sound financial decisions.
It’s not easy to broach discussions around your finances and to ask for help with managing them, but the sooner you start, the more involvement you may have.
Here are some steps to take right now, on your own or with the help of a trusted person, to ensure your financial wishes are heard and respected.
Step 1: Start the conversation about your finances.
Initiate the discussion early on with someone who understands you, your diagnosis and your needs, so you have as much input as possible. Work together with a trusted family member or caregiver to get a clear picture of what you might need for future care from a financial standpoint.
Review living arrangements, caregiving needs and access to medical benefits. For example, your goal may be to continue living at home – talk about the realities of this with your family and consider the costs and logistics of making this happen.
Step 2: Organize and review important documents.
Compile all important documents and put them in one place so that a trusted family member knows the location and any instructions. If you don’t have documents that address your health, financial management or end of life wishes, talk to your financial advisor about how to create them.
Common legal documents are:
- Financial power of attorney (except Quebec)
- Personal care power of attorney (except Quebec)
- Power of attorney and protection mandate (Quebec)
- Medical directive
Financial documents may include:
- Bank and brokerage accounts
- Mortgage or ownership documents
- Insurance policies
- Monthly or regular bill payments
- Pension statements
- Stock or bond certificates
If you feel comfortable, you could consider having an adult child or caregiver’s name added as another user on your bank accounts, credit cards or other financial accounts.
Step 3: Name another person to make decisions on your behalf.
Discuss with your family how future financial decisions will be made on your behalf. Make sure your money matters will be in the hands of someone you trust.
A power of attorney (POA) is a legal document that allows someone to make decisions for you and act on your behalf if you’re no longer able to do so, or no longer want to. You may already have this in place, but if you don’t, you can work with a lawyer to create a POA according to your wishes. Consider choosing someone who lives close enough to allow them to deal with issues as needed. To lighten the load, you can choose more than one person so that any of the named individuals can act on your behalf.
In provinces except Quebec, there are two basic types of POA, one for property and one for personal care.
- Property – a continuing power of attorney for property allows the person you choose to manage your finances and property, including pension-related matters, if you become mentally incapable.
- Personal care – an attorney for personal care makes medical and other decisions about your well-being and quality of life on your behalf if you can’t make them yourself.
In Quebec, there are two types of legal documents that allow you to appoint someone to act on your behalf: a POA and a protection mandate.
- A POA applies only to property and allows someone to make decisions regarding your assets. It’s essentially a contract that allows you to choose another person to act on your behalf in legal transactions. The POA will become invalid if you are no longer able to supervise its execution. At this point, the protection mandate comes into effect.
- A protection mandate is a legal document that allows someone to make decisions on your behalf. You can name a mandatory for property (which covers financial decisions regarding your assets), and a mandatory for person (covers personal care, medical and health decisions). You should also name a replacement in case your initial mandatory is unable or unwilling to execute the mandate. Two important conditions must be met for a protection mandate to come into force:
- Your incapacity must be confirmed in medical and psychosocial assessments
- The person you have appointed must ask the court to authorize enforcement of the mandate. This process is called homologation and is undertaken by a lawyer or notary.
Step 4: Review your insurance coverage:
With very few options available for long-term care insurance policies, it may be difficult to get coverage once you have received a diagnosis. If you currently have a policy, review the waiting period and other terms that could determine when the benefit payments can begin. Policies generally don’t refer to specific conditions or illnesses, but rather the inability to perform a certain number of daily living activities.
If you have an existing life insurance policy, review it to make sure that you have designated the appropriate beneficiaries. If you own policies on someone else, make sure that you add a contingent owner to the policy. Note that your POA for property is not permitted to make beneficiary changes on your behalf.
If you are still employed and have disability insurance, be sure to review the terms. Benefits under this type of policy are only payable when you are unable to work, with conditions around the waiting period and duration of benefit payments.
Step 5: Collaborate with your financial advisor.
Schedule a meeting with your advisor that includes your family members or caregivers. Together, you and your advisor can create a written plan to outline specific steps you’d like to take when you experience significant cognitive changes. This plan can include identifying what you’d like done at what point and when you want to initiate it. A trusted financial advisor can also partner with you and your family in helping to identify financial mistakes – often an early warning sign of increasing dementia.
Putting plans in place soon after a dementia diagnosis, or creating a financial plan that includes incapacity planning, can help secure your financial future. Talk to a Richardson Wealth Investment Advisor.
Women and dementia: by the numbers
Not only are women more likely to be diagnosed with dementia, they also are more likely to be a caregiver for a loved one with a cognitive disorder. The cost of caregiving affects women disproportionately. Proper financial planning, access to resources and the support of a financial advisor can help ease the burden.
2 to 1 Worldwide, women with dementia outnumber men
About two-thirds of Canadian seniors living with dementia are women
More than 60% of Alzheimer’s and dementia caregivers are women