Is Your Estate Ready if You Experience Cognitive Decline?
Once your cognitive abilities begin to decline (which can start in your early 60s), your accounts could be at risk. Here’s how to protect them.


We all know that planning for retirement is crucial during our working years. The goal is to make sure you have enough money tucked away to maintain your standard of living and support yourself in the event of a major life change, such as the death of a spouse or a severe illness.
Elder law attorneys work to ensure clients are protected on a legal basis by making sure clients develop advance medical directives, appointing a power of attorney and sorting through trust agreements. But how do you make sure you’re protected financially if you experience a cognitive decline in your abilities?
A study by the Texas Tech Financial Literacy Assessment Project found that our ability to make financial decisions and apply them correctly peaks in our early 50s. According to the research, that ability starts to decline around 2% each year after you turn 60. Once your cognitive abilities begin to decline, your accounts are at an increased risk.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.

Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
When cognitive abilities start to decline
It’s important to keep in mind that as you age, your cognitive abilities may start to decline, which needs to be accounted for in your portfolios. That means portfolios that include stocks, bonds and mutual funds may no longer be suitable. Many family members realize this but are afraid to talk to their loved ones about such a sensitive subject. Many investors want to protect their nest egg against market risks, but when they look at the interest rates being provided by banks, they do not see any other options.
Very large financial institutions have recognized this and have created plans that protect against market losses, but still provide an opportunity for higher returns with zero risk to a customer’s principal.
When it comes to planning for your retirement, you can never be too prepared. As you’re planning, sit down with your financial adviser and figure out what steps you can take to protect your finances. You might find that the current plans you have in place need to be updated.
In addition to talking to your financial adviser, it’s important to talk with your family and figure out a plan for your finances if you become cognitively impaired.
What to plan with your family
Here are some important topics you’ll want to discuss as you make your plan:
Appoint a power of attorney. This individual will be responsible for making all financial and legal decisions on your behalf if you are unable to do so. This person should be someone you trust and who has your best interest at heart.
Create a living will. This legal document explicitly outlines the medical treatment you are to receive should you become unable to make that decision for yourself. You can also designate someone to make medical decisions on your behalf when you are no longer able.
Discuss long-term care. It’s important to figure out plans for long-term care. If you end up suffering from Alzheimer’s or dementia, you’ll need care around the clock. You and your family will need to discuss living arrangements and care options in case that happens.
Will you live with your children so they can take care of you, or will you live in a nursing home? If you decide a nursing home is what’s best, it’s also important to discuss how that will be paid for.
Create a plan for your estate. Take this time to figure out how your wealth and assets will be distributed after you die. This will ensure that your wishes are followed and will save your family from scrambling to make last-minute decisions regarding your estate.
These conversations certainly aren’t easy or enjoyable to have, but they are crucial. Life is unpredictable, and certain things are out of your control, but making a plan for yourself and being prepared is something you can control. Be sure to take advantage of it while you can.
Related Content
- 10 Things You Should Know About Estate Planning
- Three Overlooked Benefits of Estate Planning
- 14 Rapid-Fire Estate Planning Tips
- Seven Big Mistakes People Make When It Comes to Estate Planning
- Estate Plan Check-Ups: Don’t Just Set It and Forget It
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Patrick M. Simasko is an elder law attorney and financial adviser at Simasko Law and Simasko Financial, specializing in elder law and wealth preservation. He’s also an Elder Law Professor at Michigan State University School of Law. His self-effacing character, style and ability have garnered him prominence and recognition throughout the metro Detroit area as well as the entire state.
-
The Most Tax-Friendly States for Investing in 2025 (Hint: There Are Two)
State Taxes Living in one of these places could lower your 2025 investment taxes — especially if you invest in real estate.
-
Want To Retire at 55? See If You Can Answer These Five Questions
Who said you can’t retire at 55? If you say yes to these questions, you may be on your way to an early retirement.
-
Potential Trouble for Retirees: A Wealth Adviser's Guide to the OBBB's Impact on Retirement
While some provisions might help, others could push you into a higher tax bracket and raise your costs. Be strategic about Roth conversions, charitable donations, estate tax plans and health care expenditures.
-
One Small Step for Your Money, One Giant Leap for Retirement
Saving enough for retirement can sound as daunting as walking on the moon. But what would your future look like if you took one small step toward it this year?
-
This Is What You Really Need to Know About Medicare, From a Financial Expert
Health care costs are a significant retirement expense, and Medicare offers essential but complex coverage that requires careful planning. Here's how to navigate Medicare's various parts, enrollment periods and income-based costs.
-
I'm a Financial Planner: Could Partial Retirement Be the Right Move for You?
Many Americans close to retirement are questioning whether they should take the full leap into retirement or continue to work part-time.
-
From Mortgages to Taxes to Estates: How to Prepare for Falling Interest Rates
As speculation grows that the Federal Reserve will soon start lowering interest rates, now is a good time to review your financial plans for housing, estate, taxes, investing and retirement to make the most of potential changes.
-
This Is How Lottery Winners Build Lasting Legacies, From a Financial Professional
Winning a massive lottery jackpot, like the recent $1.4 billion Powerball, requires seeking immediate legal and financial counsel, protecting your identity and winnings and planning your legacy.
-
I'm an Investment Strategist: This Is How the Fed's Next Rate Move Could Impact Your Wallet
Interest rate cuts might be coming, which could affect everything from your credit card debt to your mortgage. It's smart to prepare now — here's how.
-
I'm a Retirement Planner: These Are Three Common Tax Mistakes You Could Be Making With Your Investments
Don't pay more tax on your investments than you need to. You can keep more money in your pocket (or for retirement) by avoiding these three common mistakes.