Financial Steps After a Loved One's Alzheimer's Diagnosis

A puzzle of an older woman shows a piece missing on the top right of her head. — (Image credit: Getty Images)

Having a loved one diagnosed with Alzheimer’s can feel devastating and overwhelming, and it profoundly impacts the individual’s financial stability, as well as their family and caregivers.

As a wealth manager, I have seen firsthand how a diagnosis creates an immediate need for financial reorganization, strategic long-term planning and legal safeguards.

With Alzheimer’s affecting nearly 7 million Americans — a number projected to almost double by 2050 — proactive planning is critical for families navigating this complex challenge.

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The cost of Alzheimer's care: A stark reality

One of the first questions families ask is, "How much will this cost?"

According to the Genworth Cost of Care Survey, median annual expenses for long-term care in 2024 include:

Home care. $6,483 per month, or $34/hour for a non-medical home health aide
Assisted living. $5,900 per month
Nursing home (semiprivate room). $9,277 per month

These figures can be significantly higher in high-cost-of-living areas like Washington, D.C., New York and California.

Individuals with Alzheimer’s typically live from four to eight years post-diagnosis.

“The total lifetime cost of care for a patient with dementia is estimated at $412,936 in 2022 dollars, with 70% of those costs borne by the family caregivers in the form of unpaid caregiving and out-of-pocket expenses for items ranging from home health support to medications,” according to an article by Anita Pothen Skaria in the American Journal of Managed Care (AJMC).

Funding care: Where to start

Most families use a combination of personal savings, insurance, government benefits and community resources to pay for care. Key funding sources to evaluate include:

Personal assets and investments. Liquidating or restructuring investments, real estate holdings and other assets can help fund care. However, tax implications and estate planning consequences must be considered.
Long-term care insurance. If a policy is in place, early review is crucial. Some policies cover home care, while others may apply only to nursing homes or assisted living communities.
Veterans benefits. If the individual is a veteran, VA Aid and Attendance benefits may provide some home care and assisted living assistance.

Financial safeguards: Protecting against exploitation

A major concern with Alzheimer’s is financial vulnerability. As cognitive decline progresses, individuals may mismanage funds or fall prey to fraud.

Spouses and loved ones should be vigilant for warning signs, such as unpaid bills, large withdrawals, forgetting account logins or increased contact from "helpful" strangers.

To protect against financial exploitation, consider these essential steps:

Establish a financial power of attorney (POA). Ensure that a trusted individual can manage accounts and make financial decisions before cognitive decline progresses.
Set up account oversight. Assign a CPA, daily money manager or financial adviser to receive duplicate bank and investment statements to monitor transactions for unusual activity.
Consolidate accounts. Reducing the number of accounts can simplify management and minimize opportunities for financial mistakes.
Implement multilayered security. Enable two-factor authentication on banking and investment platforms and limit online access when appropriate.

Considering senior living options

For couples where one partner has Alzheimer’s, choosing the right living arrangement depends on the progression of the disease and the family's preferences.

In the early stages, aging in place with in-home care may be a suitable option, allowing the individual to remain in a familiar environment with added support.

As the disease advances, memory care communities offer specialized care tailored to dementia patients, providing a secure and structured setting.

Life plan communities provide a seamless transition from independent living to memory care to skilled nursing care, ensuring long-term stability as needs evolve.

For those who wish to remain at home but require around-the-clock assistance, live-in caregivers or private nursing services may be a viable alternative. These services offer personalized, 24/7 care in a comfortable and familiar setting.

Legal considerations: Planning for incapacity

Legal documents should be updated as soon as possible post-diagnosis. Elder law attorneys can assist family members draft essential documents while the individual still has the capacity to make decisions.

These documents include:

Durable power of attorney (POA). Authorizes financial decision-making in the event of incapacity.
Health care proxy and advance directives. Designate a trusted person to make medical decisions and outline care preferences.
Revocable trusts. Help avoid probate and provide structured asset distribution upon death.
Guardianship and conservatorship planning. If no POA is in place and cognitive decline is advanced, court-appointed guardianship may be necessary — a costly and time-consuming process best avoided through early planning.

Estate planning and wealth transfer strategies

Given the progressive nature of Alzheimer’s, reviewing estate planning and wealth transfer strategies should be a top priority.

Families may benefit from implementing gifting strategies early, transferring assets sooner rather than later to optimize tax efficiency and minimize estate complexities.

Charitable giving can also play a key role, with donor-advised funds or charitable trusts structured to provide tax advantages while supporting meaningful causes.

Additionally, for those who own a business, early succession planning is essential to ensure a smooth transfer of leadership and assets, protecting both the enterprise and the financial well-being of the family.

Final thoughts

Alzheimer’s presents a unique financial planning challenge that requires proactive, strategic decision-making. By addressing care costs, protecting assets, implementing legal safeguards and preparing for future transitions, families can better manage the financial and emotional toll of the disease.

Preserving wealth while ensuring quality care requires early intervention and collaboration with experienced financial professionals.

If Alzheimer’s has touched your family, now is the time to plan — before the window of opportunity closes.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Financial adviser Tom West, CLU®, ChFC®, AIF®, founded Lifecare Affordability Plan (LCAP) to address a critical need for actionable planning that integrates finances, healthcare and senior housing. Tom has nearly 30 years of experience guiding families through financial and healthcare decisions. By bridging the gap between finance and healthcare, LCAP’s experienced team works with individuals and financial advisers to provide families with a financial strategy that meets changing healthcare needs while preserving the caregiver’s quality of life.