Financial skills deteriorate early in cognitive impairment
The statistics are frightening. As the older population expands, it is estimated that at least onehalf of adults in their 80’s have dementia or at least some mild cognitive impairment. This same group holds a disproportionate portion of the wealth in this country, trillions of dollars in wealth collectively, but no one, including themselves, may realize that they have become vulnerable financially as they do not understand financial decision making as they used to do. A recent New York Times article offers some insight into this issue. (www.nytimes. Concepts such as medical com/2015/04/25/yourmoney/as-cognitivity-slipsfinancial-skills-are-oftenthe-first-to-go.html?emcedit_x). deductibles and minimum balances required in savings accounts become harder to grasp. While many people continue
Dr. Daniel Marson, a neuropsychologist to handle financial and director decisions and tasks though of the Alzheimer’s Disease life, one concept in the article Center at the University of might explain the tendency Alabama at Birmingham for even those with identifies some subtle signs healthy brains to slow or that are easy to miss. Identifying even falter as they age. the risks in investments “Fluid intelligence” or the becomes more difficult ability to solve new problems as the older adult may slowly declines over just focus on the benefits. time even starting in our Completing tasks on a list 20’s. This decline is partially of financial “to-do” projects offset by “crystallized may take longer, such intelligence” which is the as paying bills. Math used result of growing experience frequently such as calculating and wisdom. Crystallized a tip at a restaurant intelligence plateaus or doing calculations in an adult’s 70’s and combined that require two steps become with declining fluid more challenging. intelligence, persons in their 80’s and 90’s become more vulnerable. If family or other trusted advisors are not prepared to help or even attuned to the need to help, disastrous consequences may occur.
David Laibson, an economics professor at Harvard, offers some suggestions. He wishes that all 65 year olds would consolidate their financial accounts, reducing “money clutter.” He suggests having the essential estate planning documents in place, including specific Powers of Attorney which some financial institutions require (not intended to substitute for a general durable Power of Attorney). If access to credit is no longer needed, it is possible to “freeze” older person’s credit to avoid theft. Automate all bill payments possible. The Agent can request duplicate statements and notices so that it is possible to catch missed payments or payments that may be suspicious early.
One financial advisor suggests assembling a protective “tribe” or a handful of people who are willing to step in if and when the need arises. This might reduce the chances of senior abuse as it offers checks and balances.
It would seem that the most important message of this article is to plan ahead and not to leave it to chance that one will be able to manage financial decisions effectively throughout one’s lifetime.
The legal advice in this column is general in nature, Consult your attorney for advice to fit your particular situation.
Kathleen Martin, Esquire is licensed to practice in the Commonwealth of Pennsylvania and is certified as an Elder Law Attorney by the National Elder Law Foundation as authorized by the Pennsylvania Supreme Court. She is a principal of the law firm of O’Donnell, Weiss & Mattei, P.C., 41 High Street, Pottstown, and 347 Bridge Street, Phoenixville,610-323-2800, www. owmlaw.com. You can reach Mrs. Martin at kmartin@owmlaw.com