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6 ways to deal with a loved one's dementia and debt

Allie Johnson

October 21, 2015

If a parent or other loved one develops dementia, a risk that grows with age, finances can present a big problem. In fact, you may have to step in to make sure your mom or dad doesn't  rack up credit card debt or even go broke.

That's what happened to Kay Bransford, an author and entrepreneur in Virginia, after her mom and dad both developed dementia. When a home contractor tried to charge her parents more than $5,000 for needed repairs, more than five times the going rate, Bransford acted quickly to cancel the contract.

Because of the dementia, her parents also went from donating once a year to their favorite charity to making many donations of $10 to $25 in response to mail solicitations that would thank them in advance for their pledge. “I know my parents never pledged,” said Bransford, who started the blog Dealing with Dementia. “It was distressing.”

Dementia is caused by a variety of brain illnesses that affect memory, thinking, behavior and ability to perform everyday activities, the World Health Organization says. It usually is chronic and progressive in nature. According to WHO's 10 dementia facts, the number of people living with dementia worldwide, now estimated at 47.5 million, is projected to more than triple by 2050.

Kay Bransford (right) and her mother, who developed dementia.

Kay Bransford (right) and her mother, who developed dementia. Kay now handles her mother's finances.

Alzheimer's disease accounts for 60 to 80 percent of dementia cases, according to the Alzheimer's Association. In 2015, an estimated 5.3 million Americans of all ages have Alzheimer's.

In the early stages of dementia, the ability to manage finances becomes impaired, says Carolyn Rosenblatt, a registered nurse, elder law attorney and consultant who runs the website AgingParents.com. In general, people with cognitive impairment lack good judgment about money and have memory loss, she says.

For example, one of Rosenblatt's clients had a dad with dementia who had $20,000 in debt and kept opening more and more credit cards, she says.

“It's a big problem,” she says, adding that family members often can — and should — step in to help with finances.

Here are six steps to take if a parent or other loved one has dementia:

  1. Face the problem. Some adult children, when they first see signs of memory loss in their parents, dismiss the problem, Rosenblatt says. When a person can't remember a conversation they had yesterday, and it happens over and over, it's not normal aging. The Alzheimer's Association's 10 early signs of the disease include forgetting recently learned information, trouble doing familiar tasks and problems with speaking or writing.
  2. Know how dementia can affect financial skills. Even in the early stages of dementia a person may not be able to deal with financial tasks such as checking a credit card bill and getting any errors corrected, Rosenblatt says. As a result, a loved one could end up paying recurring monthly charges – such as for subscriptions they never purchased or free trials they forgot to cancel. It's also common to have trouble paying bills – or to pay one bill twice or more and forget to pay another one. “Unless you really have your nose in their finances, you won't know this is happening,” she says. “And it's only going to get worse.”
  3. Offer to help with bills. You can say, “Mom or Dad, I'm a little worried because I noticed you're having trouble keeping track of things. Can I help you pay the bills?” That way, you can verify that all bills have been paid correctly and on time, making sure utilities or insurance don't get canceled for nonpayment, Rosenblatt says. One tactic – especially if your relative doesn't use online banking – is to set up online access to credit card and bank accounts for yourself, and let your loved one continue to receive paper statements in the mail. “That works really well,” Rosenblatt says.
  4. Thousands of dollars may be at stake. And yes calling the credit card company is worth it. Be prepared for long waits, transfers to other departments, stonewalling and delayed responses. They want you to give up and just pay the entire bill.”
    — Carolyn Rosenblatt,
    a registered nurse, elder law attorney and consultant who runs the AgingParents.com website

  5. Get durable power of attorney.  It's important to get financial, durable power of attorney, which gives you the ability to make financial transactions for your parent. If your parent is cooperative, it's easy, and you can get free forms online so you don't have to pay an attorney to help, Rosenblatt says. And if your parent is not cooperative? “You've got combat on hands,” she says. If you can't get power of attorney, then you may need to go to court to get guardianship or conservatorship, she says.
  6. Enlist help. If your love one is reluctant to let you help with the bills, get help from a clergy member, another relative or a mediator. In Bransford's case, her parents' doctors encouraged them to have a loved one help manage their money. When her parents forgot how to deposit cash and checks, they added their daughter to their bank account. “From there, I could monitor what was going on,” Bransford says. Her dad died in 2013; she now handles her mom's finances.
  7. Take away the credit cards. It can be difficult to take away a parent's credit cards – especially when they're very lucid on some days, says Sheldon Goldman, a certified financial planner in California who works with senior clients. Goldman has a client whose father has memory issues, pulling out his credit cards to make donations to every charity he sees on TV and to send flowers to friends and family. He was brainstorming ways to help his client deal with his father's finances. “The family feels in a real pickle,” Goldman says. Bransford faced the same issue when her parents, who normally used checks, pulled out plastic to sign up for an expensive magazine subscription. She eventually took their credit card away and replaced it with a debit card tied to an account that contained only a few hundred dollars. “I learned to find small ways to work around issues,” she says.

Dealing with a loved one with dementia and debt is tough work. If someone with dementia builds up a credit card or other debt, you might be able to get it forgiven, but it often takes some legal help, Rosenblatt says.

“Thousands of dollars may be at stake,” she says. “And yes calling the credit card company is worth it. Be prepared for long waits, transfers to other departments, stonewalling and delayed responses. They want you to give up and just pay the entire bill.”

It's better if things never get to that point. Stay alert for signs of possible dementia and offer to help manage a parent or spouse's finances early.

Be proactive, Rosenblatt says. Some adult children say, “ ' We'll just wait and see what happens,' ” she says. “What happens is you get wiped out financially.”

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