Financial Planning For Dementia – Part 1
Financial planning and protection is one important aspect families tend to miss out on in the early stages of dementia. Experts tells us why it’s important to put a plan in place as early as you can.
There are an estimated 4.1 million persons with dementia in the age group of 60+ in India, according to a World Alzheimer’s Report 2015. The number is expected rise to about 7 million by 2020 and to 13-14 million by 2050. Financial planning or the lack of it is one aspect that is least discussed when a loved one is diagnosed with Dementia. As Mrinalini, 40, caregiver to her mother who has Vascular Dementia, points out, it can also take a backseat when the cognitive decline isn’t very slow and you are grappling with issues such as caregiving 24/7, balancing work and trying to figure out alternative care arrangements. Alzheimer’s & Related Disorders Society of India (ARDSI), Delhi, Executive Director R Narendhar agrees. “Normally caregivers are more overwhelmed by the effect of the disease and often miss this very important issue.”
Mrinalini was lucky to share a relationship of mutual trust with her sibling, which helped in tiding over the finances until they were able to sort out her mother’s financial affairs. In many cases, families leave financial planning for later, leading to complications not just in terms of having access to the locked up money but also in interpersonal relationships, mistrust between siblings, etc.
Incidentally, money problems could be the first indicator that something is wrong. ‘New research shows that one of the first signs of impending dementia is an inability to understand money and credit, contracts and agreements,’ says an article in The New York Times. Not having a financial plan in place could have severe setbacks, as mentioned in the website Dementia Care Notes. Here’s what it had to say after extensive research and interviews with caregivers:
‘Persons with dementia often make mistakes in investments because they no longer understand money transactions. People around may realize that the person with dementia is easy to cheat. They may make the person sign on power of attorney documents or property sale documents, or even taking away jewellery or cash. It is common to hear of persons with dementia giving away all their money to strangers or unknown charity organizations. Business partners may cheat the person out of the share. Because the person with dementia is active and has direct control of investments and property, the family may lose all its money and property.
Here are some guidelines for Financial planning & protection for a person with Dementia and their families and/or primary caregivers.
• We usually advise every person who has crossed 60 to make a will and an inventory of their assets and investments, says R Narendhar. Here are his four top requirements that a family should put in place: 1. An updated will 2. An Enduring Power of Attorney 3. A financial inventory 4. A Medical power of attorney
• If there is no will and the person has been diagnosed or is being treated for any memory related issues, ARDSI advises that a financial plan is put in place as early as possible. “The early stage is referred to as Mild Cognitive Decline and means that the patient is still cognitively able to decide what is to be given to whom. This is where a Financial Inventory helps,” Narendhar adds.
• Having a joint account with your elderly relative could be helpful in the long run. Ensure that you get this done early enough when the person is still able to visit the bank, sign and has the understanding to allow you to become the joint account holder.
• Banks are strict about their rules and even if you have a POA, they may still need to see proof of the original account holder in the interest of safeguarding their account. If the elderly person’s signature has changed due to the disease, they would seek a medical certificate. “There are lot of procedures involved and signatures required. So if you have the time, it’s best to plan this while the patient is still able to sign,” advises Mrinalini. She cites her own example. “We needed to consolidate all my mother’s accounts and had to close a Demat account as part of the process. Despite me having a POA, the bank refused to divulge the information unless the account holder, my mother, visited. Since it was impossible for my mother to visit the branch to close the account in person, finally, I spoke to a very senior person at the bank, explained the situation and even put her on a video call with the bank officials to solve the problem.” Mrinalini wants to share this example to highlight that while the banks are doing everything to the best of their ability to protect the customer’s account, it is a huge problem for the caregiver, who is already grappling with too many responsibilities. “A proper system to handle situations such as these will make it easy for all.”
• Build awareness and train everyone around you, suggests Amrita Patil Pimpale of Echoing Healthy Ageing. She cites the example of the senior citizen in the early stages of Alzheimer’s who visited the bank, withdrew cash and lost it on the way home with no recollection of who he gave it to. “In India, banks often operate on personal relationships. If the senior citizen has been a regular visitor to the bank, it’s best to talk to the people there and make them aware of the situation. Building a circle of trust and making people around you aware of the situation helps.
• Be very careful about cheating. Get involved in matters like investments, property, tax, etc if you weren’t earlier. Locate important papers, and keep them safely. If the person with dementia does not understand or cooperate, get the support of family friends and respected seniors whom the person trusts. These activities may be more difficult if you were not involved in such tasks earlier, and now have to do them as well as handle the workload and stress of caregiving as mentioned in Dementia Care Notes, an extensive resource guide on every aspect of Dementia.
• As advised by R Narendhar, create a Financial Check List with a list of payments to be made and taxes to be filed throughout the year.
• If the elderly person with dementia is still keen on handling the finances, ensure that a trusted family member has access to the investment accounts and is involved in all investment decisions. Stay alert that the illness could severely affect a person’s decision making abilities and that trusted person may need to step in.
The Legal Angle
What’s the difference between a Power of Attorney, a Medical Power of Attorney and an Enduring Power of Attorney? We asked Shiv Kumar, Senior Advocate with 40 years of active practice at the Karnataka High Court and one of the key people behind the Elders Help Line in Bangalore, to explain what it all means and what is advisable from a legal point of view.
A Power of attorney is a form of authorization, recognized by Law under which the person in whose favor it is issued ( Attorney) is authorized to act on behalf of the person who has executed the Power of Attorney, namely the Executant. The ( Executant) is free to determine the extent of powers to be conferred upon the Attorney. The Power of Attorney must be executed when the Executant is in a sound state of mind. It must not be executed under coercion pressure, duress or undue influence. It has necessarily to be a voluntary act and an act of volition by the Executant. If the Executant desires, the powers of managing financial and property affairs could be vested in the Attorney through appropriate provisions in the Power of Attorney.
An enduring power of Attorney is essentially a concept and practice prevalent in UK. In fact it is regulated by statute in UK. All powers of Attorney cease on the death of the Executant or on his/her losing mental capacity. Therefore, the concept of an enduring power of Attorney was recognised in the UK. This power of Attorney continues to to be valid even after the death of the Executant or even after the executant loses mental capacity provided such a specific provision is made in the Power of Attorney. Generally this is not recognised in India.
A medical Power of Attorney is a document under which a designated person is nominated as being authorised to take all decisions relating to the health, medical care of the Executant including decisions relating to institutional care, hospitalization etc. However this Power of Attorney also needs to be executed when the Executant is in a sound mental health.This practice is not generally prevalent in India considering that in most cases the family members are around and take these. calls. The New Mental Health Act now provides for a person to issue advance medical directives which is akin to the Medical Power of Attorney.
Suggestion for caregivers: We advise execution of a general Power of Attorney which would be be registered with the jurisdictional Sub Registrar. All powers that are required to manage the affairs of the executant could be included in such power of attorney including the contents of a Medical power of attorney. It would be a comprehensive document. This document would need to be executed while the executant is in a sound state of mind. It could also state that the Power of Attorney would be valid in case the executant loses mental capacity. But that clause may not be accepted as being valid. The new mental health act provides for these situations and it is recommended that instead of powers of attorney recourse be had to the Act.