A study of Americans over age 50 finds that as mental capacity declines for the financial decision maker of the couple, those duties eventually get turned over to the spouse with his or her faculties in tact. That’s not surprising.
The surprise may be that the handoff usually comes too late, well after the decision-maker’s dementia has started to show. In fact, 80 percent of couples still relied on the decision-maker to make the decisions even after dementia had started to show.
And perhaps the worst part of it, according to a story on marketwatch.com, is that at this point it is probably too late for the decision-maker to educate his or her spouse about their investments and finances in general.
This issue can also cause such couples to become victims of financial fraud, the story says.
One of the biggest problem areas is in managing 401(k) plans, particularly if that is where the couple’s income is coming from, it says. If such plans are poorly managed, the couple may run out of money.
To keep such disasters from happening, the article urges:
- the financial decision maker must include his or her spouse in the decision making process before dementia sets in. Such spouses can also take courses or read books on managing money.
- both must keep tabs on withdrawals or changes in investment strategy. Unusual withdrawals or changes may signal a decline in mental function.
- each spouse must have a power of attorney drawn up giving each the power to make decisions for the both of them — or appoint a trusted proxy — in case one becomes mentally incompetent.
- if one notices the other is declining, he or she must take over the reins immediately.
If you have questions about estate planning, feel free to call us for a consultation at (626) 696-3145.
