Do Your Financial Plans Consider Memory Loss?

Memory loss can creep up over time or be a sudden devastating hit with a stroke. Let’s face it, it’s something we would prefer not to think about. But we must, because the Journal of the American Medical Association has reported that managing personal finances is one of the first life activities to decline with cognitive impairment and early stages of memory loss. What should be done to protect your financial plan if your memory fails?

First, and most critical, is to have a durable power of attorney in place so that a trusted family member or members can access financial records and accounts. A “durable” power of attorney means that it is still valid, even if you no longer are competent to make decisions. Up until about 30 years ago, going back to colonial times, the law presumed that if a person did not have the power to make decisions themselves, that person could not give a power of attorney to someone else for a power that they themselves no longer had. But with people living longer the entire reason that a power of attorney is done is in anticipation that there may be cognitive decline. So the law was changed and language was put in the power of attorney that “This Power of Attorney shall not be affected by the subsequent disability or incompetence of the principal or by the lapse of time since its date of execution.” In 2016, the law was further changed so that all Connecticut powers of attorney are considered durable.

That is one step. But think about this. It is very difficult for someone else, such as your spouse or child, to figure out what you own and where the important documents are. The crucial step is to make a list of all your bank and brokerage accounts, life insurance policies, annuity and any other type of investments. That should include the phone numbers, mail addresses, email addresses and location of the person or office you deal with.

Another step is to organize and have important information in one place and tell your family where that list is located. Better yet, give your spouse and at least one other family member a copy of that list. It won’t do any good if you can’t remember where it is and they don’t know. That list should include names and contact information for your doctors, accountants, lawyer and financial managers.

Nowadays that should include account login information and passwords. If you have a safe deposit box or US Savings bonds or stock certificates or insurance policies, list them and where they are kept. Are they in that little strong box in your bedroom closet or in a bank safe deposit box? Or somewhere else?

A serious growing problem for those with significant memory loss, is that it makes people more susceptible to the many financial scams preying on the elderly. Some time ago a grandfather came to me terrified that his grandson had been kidnapped and the phone caller demanded cash be sent. His grandson was in college and a simple call to the grandson’s cell phone foiled the attempted scam.

Writing this article reminds me that my lists are out of date, and that my family should have an updated copy of the financial and medical information and contacts in their possession, and not just tucked away in that drawer in my desk. So like me, compile those lists and contact information before you put it aside and forget to do it. And give them to your family.