Financial Planning When the Diagnosis Is Alzheimer’s

by Donald L. Haisman, CFP^®

He sounded very sad, after I phoned with good news. I could tell there was something he wanted to tell me. He said he was not doing too well. I pressed him for more information. He said it was his wife,…she had been slipping mentally and had just received the diagnosis of Alzheimer’s disease.

This scenario plays out frequently in many families around the world. According to the Alzheimer’s Association® every 70 seconds someone develops Alzheimer’s disease.

This diagnosis can have a profound effect on a family’s future financial condition. This article focuses on the financial planning factors that should be considered when the diagnosis is Alzheimer’s disease.

Experts in this field tell me that the place to begin is with the most complete medical evaluation as possible. New methods of evaluation and medication for treatment are constantly being improved. Along with this a care plan should be developed. A wealth of health and care plan information is available from the Alzheimer’s Association. In addition, the site has links to local Alzheimer’s Associations that may be available in your community. However, remember that not all of the local Alzheimer’s groups are linked with the national association.

Early on you will want to consult an attorney to ensure that your legal and care giving documents are up to date and in order. Another early focus should be financial planning.

The financial planning aspect is very important to keep the caregiver from feeling overwhelmed with money matters as the disease progresses. Begin by preparing a complete list of all assets, their approximate value and ownership. Also include all liabilities, both current and those you expect in the future. Be as accurate and detailed as possible. This is no time to be secretive about your financial affairs. This list, also known as a net worth statement, is available in many places as a “fill in the blanks” form. Your accountant or financial planner should be able to supply you with a copy.

One other piece of information that will be most helpful to add to your net worth list is the initial cost of each asset and its date of purchase. This is known as the cost basis. You need to only collect this information for assets that are not in your retirement account. This is essential information for income tax preparation if some asset needs to be sold.

Next, add up the total current value of all of your assets and subtract all of your debts to obtain your net worth number. This number will be most helpful when doing financial and legal planning.

It is time to seek experienced professional help at this point. Most professionals will provide an initial free consultation. For the financial planning aspect, I would recommend you gravitate to a Certified Financial Planner™ – CFP® practitioner, because of their requirements for certification and continuing education. Ask about their background working with families experiencing Alzheimer’s disease. Take that net worth statement with you on your first appointment.

If you are the caregiver, you can expect that to develop into more than a full-time job. Therefore, work with your financial planning professional to try to simplify your financial and investment situation. Now is not the time to be personally responsible for things like rental property.

Arrange your investments and finances for flexibility so you can react to unknowns that will present themselves in the future. One way is to put all of your investment assets with the same custodian firm. This will result in all of your statements looking similar, and easy to read and review. In addition, you can have just one contact for all of your accounts if you should have questions or need service.

Here are the most common financial planning mistakes made by families:

• Failure to understand the legal aspects of managing another person’s finances
• Holding too much cash in an investment account
• Not beginning the financial planning process early enough
• Not realizing that you may be unable to properly manage your own affairs at some time in the future
• Not delegating the oversight of investments to others during this stressful period
• Holding assets in joint tenancy

Although Alzheimer’s is a devastating disease, early financial planning can and will help mitigate the stress to all concerned.

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