The fastest growing age group in the United States is the "old old," those people over the age of 85.
That’s the good news. However, the Alzheimer’s Association has predicted that 46% of those people will develop Alzheimer’s or some form of dementia. Five million Americans currently have the disease. It is the sixth leading cause of death in the U.S. Ten million baby boomers are expected to become victims of Alzheimer’s.
Unfortunately, there currently is no cure for Alzheimer’s, and it is often difficult to predict if an individual has succumbed to it. As people age it is normal to expect that there will be some loss of memory. Many people are fearful that they are afflicted as they begin to have difficulty remembering names, dates and other information. How is one to know if Alzheimer’s is a real concern?
The first step is to assess the situation. What changes in memory, thinking or behavior have you noticed? Has the person who was normally very prompt begun to miss or come late to meetings? Is the individual having difficulty doing simple math calculations or following simple directions? Has the person shown increased anger or irritation when you try to correct them? Has the individual become disoriented in identifying where they are or gotten lost traveling to locations they were very familiar with in the past?
Secondly you should consider if there were any other factors that could result in this behavior. Is there currently a significant amount of stress in their life? Are they dealing with some health issues like diabetes or depression? Have they suffered a urinary tract infection? Are they recovering from surgery and anesthesia?
Have other people who know this person well expressed concerns? Have any family members or close friends noticed changes? What was the behavior that they observed? The Alzheimer’s Association has identified 10 early signs and symptoms of dementia. See if the individual shows any of these symptoms.
If various factors are indicating that there is a problem, it is time to start a conversation. If it is you that you are worried about, share your concerns with a good friend or family member. If it is someone else, decide who would be the best person to open up a conversation with them. The Alzheimer’s Association website can give you suggestions on how to conduct the conversation in a non-threatening way.
Based on your discussions it may be time to reach out for help. You may decide to accompany the person to visit their doctor. The Alzheimer’s Association maintains a 24-hour support line (800-272-3900). They can help guide you to organizations in your area that support Alzheimer’s patients and their families.
There are certain steps that you must take to maintain the safety of an Alzheimer’s patient.
The Durable Power of Attorney
In addition to a Will, the durable power of attorney is a document everyone must have, especially those individuals who are concerned that they may lose their ability to conduct financial transactions. Without a durable power of attorney, your spouse or your children cannot act on your behalf in financial matters if you are incapacitated. One of my clients became very ill. He was in the hospital when I called his home to suggest that he transfer an investment from one fund that was performing poorly to a CD with a higher interest rate. He needed to sign a document to make the transfer. If his wife had had a durable power of attorney, she could have signed the document for him. She didn’t have the authority, so we had to wait until he was well enough to do it himself.
You may use this document many times. It allows the “attorney in fact” to act on your behalf, sign checks for you, sign legal documents, etc. It should be updated every two to three years. Selecting someone to have the durable power of attorney is an important decision. You should give your spouse this power and another person, a family adviser or one of your children whom you consider responsible and trustworthy.
The Health Care Proxy
This is a legal document that identifies who will make the difficult health care decisions if you are unable to make them. It is especially important for a person who has been diagnosed with Alzheimer’s to identify this individual. This person is often called the health care agent and the document is often called the Durable Power of Attorney for Health Care. It is necessary that you select a person who understands what your wishes are and is willing to carry them out. It may be your spouse, one of your adult children, a friend or an adviser. It is also important to name a successor for this role if the agent is unavailable.
Lifefolio
The third important document that an individual must have is what I call the “Lifefolio” or “Grab and Go Binder.” This document is a single source for all important financial information related to the individual. It is especially important to have this document readily available if a person experiences an emergency or has lost the capability to find and recall important information. It can be collected in a three-ring binder or in selected computer programs such as EMoney, Everplans, or Whealthcare Planning. The document should include reference to all legal documents, insurance policies, investments, key advisers, and internet passwords. It is important to keep this information up to date and in a location readily available to family members.
Financial Advisers and Elder Abuse Protection
A trusted financial adviser is a critical team member for most families. Often that adviser is the first person to recognize that a client may be experiencing diminished mental capacity. In response, the adviser must have a standard protocol or policy to deal with the situation. Advisers are strongly recommended that when they take on a new client, they ask for a trusted contact who can be engaged if the client is beginning to show mental deficiencies. FINRA, the overseer of broker/dealer firms has issued a new regulation, Rule 4512, that requires members make reasonable efforts to obtain the name and contact information for a trusted contact person upon the opening of a non-institutional customer’s account or when updating account information for a non-institutional account. The trusted contact person is intended to be a resource for the member in administering the customer’s account, protecting assets, and responding to possible financial exploitation.
Financial firms are advised to establish policies and procedures to document and escalate cognitive decline issues. They should consider identifying potential trigger events and how they work with a client after a trigger event. In addition, they should establish procedures for escalating and documenting their findings. Firms also need to determine when to involve outside parties or counsel after a trigger event occurs. They should establish a point person in the firm to monitor the situation with a client and make sure that all established procedures re followed.
The establishment of these diminished capacity protocols is designed to protect the firm and provide meaningful support to the client. As the average age of clients is increasing more and more advisers will be faced with clients who are losing their mental capacity. The firm’s protocol will become an important compliance issue that firms must establish.
Diminished Capacity and Elder Financial Abuse
Older adults are becoming a prime target for financial scams and other forms of financial exploitation. One in 20 older adults has experienced some form of financial abuse over the last 12 months. Yet less than half of those situations are reported. Dementia plays a very big role in many of these cases. The need for help with the activities of daily living has made victims especially vulnerable. Ninety percent of abusers are family members or trusted friends or caregivers. One out of every 10 of these cases results in elders resorting to Medicaid to meet their financial needs.
The most common abuses include the unexpected addition of authorized persons or changes to beneficiaries of bank accounts and insurance, out-of-the-ordinary withdrawals from investment accounts, or multiple calls or activity on accounts in a short period of time.
Often these situations include requests for payment for work not done, lottery scams, “phishing” emails and unauthorized investments or insurance products. One of the most common scams is the “Grandparent scam.” Nearly one in five people losing money are called by a person posing as a grandchild who is in trouble and needs money. The imposter often asks the individual to contact a “local authority” who will provide instructions for sending the money. In 2017 individuals lost over $328 million dollars to this scam. People over age 70 suffered the greatest losses.
Recent Regulations to Protect Older Individuals
FINRA recently enacted Rule 2165 which affects advisers with broker/dealer firms. It is intended to help a “specified adult” which includes a person over age 65 or an 18-year-old with a physical or mental impairment. It provides broker-dealers and their associated persons with a “safe harbor” from previous rulings, enabling them to withhold certain disbursements if they are of a suspicious nature for a period up to 25 days. They cannot restrict the sale of securities but can delay the disbursement of funds while they investigate the transaction.
The federal government issued the Senior Safe Act in May of 2018. This act enables financial institutions to report suspected fraud to law enforcement without fear of litigation as long as the financial institutions have trained their employees how to detect suspicious activity which might indicate financial abuse. This law was designed to encourage firms and agencies to invest in training their employees to identify and report instances of elder financial abuse. It is not certain how many firms have moved forward in establishing these training programs.
In many states, firms are required to alert government protection service organizations if they suspect financial exploitation of elders. These agencies include Adult Protective Services (APS), State Securities Commissions (SSC) and law enforcement services in their state. The NASAA Model Act to Protect Vulnerable Adults from Financial Exploitation has been enacted by a number of states.
Full Article & Source:
Steps to Protect Those with Diminished Mental Capacity from Elder Financial Abuse
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