How should a Dementia Caregiver manage finances and legal documents?

Being told that your loved one has Dementia can be a life changing event for the family. Family caregivers have a lot to deal with in the stages immediately following the diagnosis. Everything from trying to understand what Alzheimer’s disease actually is or what causes Vascular dementia to coming to grips with the realization that there is no cure for most common types of Dementia, the family caregiver is caught in a maelstrom of frenetic research.

One topic that many caregivers find especially burdensome is needing to put the family’s financial and legal affairs in order. The health and social care costs for a person with dementia can often run over $350,000 over the lifetime of the condition. Without appropriate planning to cover these expenses families can struggle to pay or find the financial burden of care insurmountable.

Yet, this need not be that hard. The following activities can go a long way alleviating such burden, and help caregivers better manage the condition along with their loved ones:

#1: Get the necessary legal paperwork done quickly

Getting a Power of Attorney or PoA (or Lasting Power of Attorney, LPA) will allow the caregiver or guardian appointed as the attorney to make decisions in the best interest of the person with the condition. The person with the condition usually appoints their attorney. As a family caregiver if you have been appointed as the attorney it will go a long way in making it easier to handle your loved one’s issues pertaining to property, finances, health and welfare.

If the loved one does not have a Will then get one made as soon as possible. A Will allows your loved one to describe how they want their assets (property, capital, etc.) to be distributed or managed when they are no more. A Will can go a long way in assisting the caregivers manage family assets easily.

#2: Identify all sources of income and diligently track expenses

This is one of the hardest items for caregivers to manage. If your loved one has been managing bank accounts and expenses or if you do not have access to your loved one’s accounts then you will need to be appointed as an attorney (through a PoA or LPA above) first. You will also need to discuss with your loved one to get any online login credentials that are often necessary to manage financial instruments such as investment/fund accounts or bank accounts.

Often in a household one spouse takes the lead in managing day to day expenses. This role now needs to be increasingly performed by the caregiver. Start with a simple but exhaustive list of all your expenses (such as utilities, council or house tax, credit card payments, etc.) along with sources of income (such as salary, investment income, pension payments, etc.).

It is vital that you keep up with all monthly expenses to avoid any late or penalty fees from the service providers. Setup direct pay or direct debit options for your recurring expenses wherever possible. Review credit card statements diligently and ensure you are not being charged for items you cannot recognize (talk to your bank immediately)

#3: Plan for long-term care expenses now

In most of the cases getting government support to cover your long-term care expenses (such as stay of your loved one in a care home or nursing home) is not a feasible option. Either expenses covered are capped (way below needs) or the financial thresholds are very easily breached making the family ineligible for state coverage. Hence understanding options and implementing them to cover your long-term care costs is vital. Buying long-term care insurance is one such option. However, such care policies have either become increasingly very expensive and your loved one typically needed to have been already covered at the right age (typically when the person being insured is in early 50s) or there simply aren’t that many insurance policies to choose from in the first place. A common option is – to generate some liquidity from the built-up value in your property (assuming you own one). Estate planning and equity release plans can generate either lumpsums or annuities that can cover a large part of your long-term care costs. However, keep in mind that such policies and financial instruments typically come at a large cost.

There are a range of things to prepare for in the financial and legal space. The upshot is – planning is key to managing the financial requirements when you are faced with dementia in the family.

Sources used in this article:

  1. 2017 BoA/Merrill Lynch + Age Wave survey of 2200 unpaid family caregivers, compiled by National Institute on Aging (NIA)

  2. Journal of the Alzheimer's Association, 2020 Facts and Figures

  3. Market research and customer feedback, zelar Health