You’re The Power of Attorney for Finances: Now What?

If your aging parents did some planning ahead, and you are the person Mom or Dad appointed for the job of managing finances, what’s the job description? First, you need to know when to take over the checkbook and other responsibilities. If your aging parent had a stroke, or accident and can’t talk or think clearly, it’s obvious that it’s time. But what about the situation in which your aging parent is gradually losing competence over time because of dementia? How do you know when to step in?
Dementia is a disease of the brain which causes the loss of brain function over time. Memory loss is the first sign. Alzheimer’s Disease is the most common form of dementia by far. The kind of memory loss associated with Alzheimer’s Disease (AD) is not just simple forgetting a name or the date. It can be memory loss for the purpose of familiar objects, disorientation in one’s home, forgetting how to do things one has always done, and other serious signs. Millions of adult children of aging parents are now facing or will soon enough face this question. When is it time to take over handling the money for Mom or Dad?
If your aging parent has been diagnosed with Alzheimer’s Disease or other dementia, it is good to plan a timeframe to take over the management of money. The early stages of AD can last for several years, and Mom or Dad may seem to do things pretty well at the early stage. However, dementias are progressive, which means they get worse as time passes, and no medicines available now can actually stop dementias from getting worse over time. So, if your parent is in the early stage of dementia, or has what doctors call “mild cognitive impairment”, it’s good to talk over a date when you will take on the responsibility such things as paying bills, deciding to pay for needed home repairs, and how to use savings or investments.
The problem with “mild cognitive impairment” is that no dividing line has been created to tell us the moment when “mild” becomes “moderate” or when “moderate” becomes “severe”. So, for the adult child who is to exercise the power of attorney, it is wise to set a date for taking over. One or two years past the time the dementia is diagnosed may be all you can count on as a relatively safe time for your parent to remember to pay bills and make financial decisions. It could be more and could be less. The point is, the ability to manage money is going to end as a person lives on with dementia. Caregiving family members need to be ready for that end point, even if it means creating one by agreement.
It is respectful of your aging parent to ask him or her early on in the progress of dementia, if possible, to agree to let you take over the checkbook by a certain date. Ironically, by the time dementia has done its damage to your aging parent’s brain, he will not likely be able to tell how impaired he is. Many people in the middle stages of AD, for example, do not have enough brain function left to actually see how dangerous they are in making financial decisions. They may think everything is fine. It is therefore up to their adult children or loved ones to see what lies ahead and make definite plans to take on financial management by a specific time, even if the aging parent does not agree.
Birthdays are a marker of time, and suggesting that the adult child take over the finances by a certain birthday of the aging parent may make the transition easier. It is good to let your parent’s doctor know this plan. In some cases, where there is a trust, for example, a doctor’s certification that the person is no longer capable of being in charge of money may be needed when the time comes to take over. A pre-set date to which the elder has agreed makes it easier for the doctor, too. For those whose aging parents have dementia, don’t be surprised if your parent forgets the agreement by the time that birthday rolls around. Stick to your plan, and keep your parent’s money safe by exercising that power of attorney. For aging parents with dementia, the risk of losing money or spending it unwisely is too great to ignore.