Alzheimer's: Get Your Finances in Order
Prepare for the financial impact of this devastating disease soon after a diagnosis.
Bill and Nancy Frost started making financial plans to deal with Alzheimer's disease as quickly as they addressed the medical issues. Bill, 75, is still in the early stages of Alzheimer's after seven years, but he and Nancy, 73, know that his health could change at any time. They found an elder-law attorney through the Alzheimer's Association in Houston, and set up a power of attorney and health-care proxy so Nancy or their children could make decisions for Bill when he no longer could. They updated their wills and estate plans, and wrote down all of their account numbers and financial information. They also "consolidated most everything," says Nancy, selling their boat and beach house where Bill used to go to fish.
Now Bill and Nancy are selling their house in Houston. They recently moved to a continuing-care community in Corpus Christi with a two-bedroom apartment that opens onto a courtyard, with a dog door for their two schnauzers. Bill can move to the skilled-nursing or memory-care unit there if he needs extra help.
Planning for the worst. "So many people are in denial at first," says Byron Cordes, a geriatric-care manager in San Antonio. He recommends going to a memory clinic, neurologist or geriatric assessment clinic for tests as soon as you suspect a problem (your local administration on aging can help you find one; see www.eldercare.gov).
Because Alzheimer's is a progressive disease, families usually have more time to plan than they do with an immediate trauma, such as a stroke. But because Alzheimer's can last such a long time, it's best to start planning for the next steps right away, even if your long-term-care policy or savings will pay for the first few years of care, says Karl Kim, a certified financial planner in La Mirada, Cal., who specializes in retirement crisis planning. For example, if it makes sense to spend down assets to qualify for Medicaid, you would need to give money to your children more than five years before applying.
Also, if you have a state partnership–eligible long-term-care policy—now available in most states—you can protect more of your assets if you do eventually go on Medicaid (see www.longtermcare.gov). If you buy a partnership policy that covers a total of $200,000 of care, for example, the patient can qualify for Medicaid after exhausting the benefits but still keep $200,000 in assets.
Crucial decisions. After a confirmed diagnosis, sit down with your family and talk about what you want, says Cordes. "You're not going to be able to make those decisions in the future," he says. Talk about where you want to live and what type of care you want to receive. A geriatric care manager can help with these decisions and may find benefits you didn't realize you were eligible for, such as special aid for veterans. Care managers tend to cost $85 to $200 per hour or $600 to $1,000 for an initial assessment, says Cordes.
Get a power of attorney and health-care proxy so your spouse or children can make financial and medical decisions later on. An elder-law attorney can draft those documents and help with Medicaid planning. Elder-law attorneys typically charge $200 to $400 an hour.
Ask whether your bank needs additional legal documents, says Kim. Some require their own power of attorney forms even if you have one from a lawyer, and that can be complicated after the Alzheimer's has progressed.
Paul Lilly's father, Gordon, had a lawyer draft power of attorney documents in the 1990s so that Paul could handle his affairs if anything happened to him. Paul didn't think much of it then—his father was in his seventies and healthy. "At the time, I filed it and life went on," he says.
Gordon was diagnosed in the early stages of Alzheimer's six years ago and received care from family members for several years. In October 2011, after the Alzheimer's had progressed, he moved into a nursing home with a memory-care unit in northern California.
Paul took the power of attorney to the bank and asked to access his father's account so that he could pay the nursing home from the account in which Gordon's Social Security and VA benefits were direct-deposited. But the bank said he needed to fill out its own power of attorney form. Paul went from branch to branch until he found one that would honor the original power of attorney, although that branch required Gordon to come in person. (You may be able to snip through the red tape by closing your parents' accounts at their bank and moving to a bank that recognizes the power of attorney.)
"I wish, before the Alzheimer's started to advance, that I had gotten my name on his bank account and retirement accounts," says Paul. "Get all of that done when everybody is lucid, and do it way before you need it."