The Summer 2012 issue of the American Society on Aging’s journal “Generations” got me excited. Why you ask? For the first time we have a document summarizing the current knowledge of elder financial capacity and competency in America. Experts from economic, clinical, legal, and public policy research write up informative articles about this growing problem. One of the most important articles, I think, was written by Kristen L. Triebel and Daniel C. Marson titled “The Warning Signs of Diminished Financial Capacity in Older Adults.”

Individuals with mild cognitive impairment or those with early stage Alzheimer’s are particularly at risk for declining financial capacity and competency. They are the focus of this article. These individuals are likely to develop issues with the following financial skills perhaps even before they are diagnosed.

The Warning Signs

  • Memory lapses – forgetting to pay bills, paying them late, or paying the same bill repeatedly
  • Disorganization – misplacing financial documents, missing deadlines like when taxes are due
  • Declines in checkbook management – changes in one’s ability to use a checkbook, for example incorrectly filling out checks, writing the wrong payee or payment amount, or calculating the wrong balance after a transaction
  • Arithmetic errors – difficulty with making change to pay at the store or figuring out the tip in a restaurant
  • Conceptual confusion – declines or confusion in general knowledge about concepts like your will, annuity, or mortgage
  • Impaired judgement – judgement about the use of money or how to invest declines

The authors point out that considering an individual’s baseline (or normal financial ability and functioning) is the first step. Then look for any of the previously mentioned warning signs. Often the first financial skills to decline are the ability to manage a checkbook and the ability to do mathematical computations. The authors suggest action once warning signs are detected, and encourage family members to discuss any concerns with the older adult. It is important to respect the elder’s autonomy so they suggest the following:

  • simplifying and setting financial routines
  • consolidating accounts so the financial caretaker can keep track of the flow of funds
  • putting the proper legal documents in place
  • taking advantage of new bank technology (direct deposit, automatic bill pay, over-draft protection, and online banking) to help monitor and maintain the accounts

Financial exploitation is an increasing concern in the United States. Often these victims had decreases in their financial capacity but perhaps did not notice or did not acknowledge the decline. As the elder law attorney William Brisk mentions in a later article, “Being old does not make one incompetent, but aging is often accompanied by declining memory and other cognitive deficits, which can lead to poor judgement and even irrational behavior. The classic view of competence is that you either have it or you don’t. Like a light switch, it’s either on or off.” In reality, it is not that black and white.

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