Diagnosis of dementia calls for financial plan

by Russ Wiles - Apr. 6, 2012 02:09 PM
The Republic | azcentral.com

A lot of people tend to put off big financial and estate-planning decisions -- roughly half of Americans don't have a will, for example.

But when a diagnosis for dementia enters the picture, it tends to add urgency.

Alzheimer's and other age-related diseases that affect mental health not only complicate daily life but can strain family relationships and drain your finances. It's wise to research options as early as possible and to put plans in place while you're still capable.

Those were among the challenges for David Scott and his wife Debbie Perry when she was diagnosed with early-onset Alzheimer's disease three years ago.

"If the disease wasn't in our lives, we wouldn't have thought of some of those things yet," said David, an electrical contractor who lives with Debbie in Phoenix.

In addition to learning about day care, transportation assistance and other ways to cope on a daily basis, the couple also got their wills in order and drafted power of attorney documents to designate someone to make financial or medical decisions on their behalf if they can no longer do so. These are directives most people should have anyway, but they can be critical for people with mental-capacity problems.

Another helpful document is a living will, which allows a person to specify their wishes regarding whether to stay on artificial life support if the situation arises. Many people also have attorneys draft a living trust, which provides further instructions and powers, such as the ability to delay inheritance payments to beneficiaries. Trusts typically are combined with powers of attorney, wills and living wills into a complete estate-planning package.

It's also a time to update beneficiary designations on insurance policies and retirement accounts and to make sure trusted relatives can locate your documents.

"There are ways for (patients) to stay in control when they're not in control anymore," said Mary Lou Hernandez, a social worker at the Banner Alzheimer's Institute who teaches a two-hour seminar for the benefit of dementia patients, their caregivers and family members.

"What we talk about in the classes is that there are options," she said.

David and Debbie attended the class and have received help from the Banner Alzheimer's Institute in other ways. They say the connection has given them practical tips and hope.

"A place like this makes you feel you belong," said Debbie, a 61-year-old retired nurse case manager who seeks to raise awareness for others.

The next seminar is Monday, with five other classes scheduled for later dates throughout the year.

"When people are diagnosed early, they still have the capacity to direct their affairs," said Jan Dougherty, director of family and community services at the institute. "And the earlier we can include other family members, the better."

The period following a dementia diagnosis also can be a good time to start looking into 24-hour care facilities should the need arise. Group homes, typically based in single-family residences, offer the most basic care, followed by assisted-living facilities on up to skilled-nursing centers.

Costs rise at each stage, as does regulatory oversight, said H. Micheal Wright, a nursing-care law attorney in Mesa.

He suggests doing research, looking for signs such as complaints filed against facilities you might be considering and finding out how various centers have been rated or inspected. For example, Medicare.gov offers an option to search for nursing homes and home health-care providers and compare them on several criteria.

It also can help to visit a facility at different times of day, Wright said, suggesting that you look for signs of neglect, such as patients with unexplained bruises, weight loss, pressure ulcers or who are lethargic or have fallen recently. "Poorly managed or understaffed facilities are usually where injuries occur," he said.

A long-term-care insurance policy can pay for the assistance required for a person with dementia. But by the time a disease is diagnosed, it's too late to qualify for the purchase of a policy. Still, many patients bought coverage in earlier years, so it's important for them to gain familiarity with what they have, Hernandez said. A diagnosis also can be a good time for other family members, especially younger ones, to consider buying a policy.

And there are federal and state programs with which to gain familiarity, such as the Arizona Long-Term Care System. or ALTCS, which provides long-term assistance for eligible patients, based partly on financial need.

Singles generally must spend down their assets, keeping no more than $2,000 plus certain assets that don't count toward the dollar limits. These include a personal residence, a vehicle, personal belongings, burial plots and $1,500 designated for burial expenses.

The spouse of a patient is allowed to retain a higher amount of assets. The formula is a bit complex, but, in short, the healthy spouse may keep half of the couple's shared assets up to $113,640.

Part of the Banner seminar covers financial and other issues from the perspective of the healthy spouse. For example, Hernandez said she knows of a man who didn't plan well and wound up depleting his 401(k) retirement account on his wife's care.

"It could have been protected," she said. "This is a disease that can bankrupt families."

Alzheimer-preparation seminars

Banner Alzheimer's Institute offers periodic two-hour seminars to explain some of the financial and other issues facing dementia patients, including a program on Monday from 4 to 6 p.m. at the institute, 901 E. Willetta St, near downtown Phoenix. The program is free but requires registration (call 602-839-6850).

The institute also is planning seminars on May 7, June 11, Aug. 13, Oct. 8 and Dec. 10. Visit www.banneralz.org for information.

How to avoid scams

Chicago attorney Andrew Stoltmann suggests seniors take these steps to avoid financial scams:

Put assets in a trust and hire a bank-trust department to manage them. While bank-trust departments can have high fees, they are usually conservative in managing client funds and will help protect the account.

Make sure a trusted family member sees bank or other financial statements on a regular basis, possibly by having the financial institutions send out duplicate copies. Fraud losses often aren't noticed for months after the fact.

Make an inventory of jewelry and other valuables. Jewelry is the top item stolen from the homes of seniors. Take photos and document valuables.

Get caller ID. Financial scammers love to work by telephone. Stoltmann considers the minimal cost of this protection to be worthwhile.

Protect your identity and mail. Take steps such as securing mailboxes and checking credit reports for unauthorized transactions. You can do so for free through annualcreditreport.com. Also, invest in a shredder.

Consider working with a fee-based certified financial planner. Have the adviser review your portfolio once a year. Fee-based planners can give an unbiased overview, he said.

-- Russ Wiles

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