Academic journal article Generations

The Warning Signs of Diminished Financial Capacity in Older Adults

Academic journal article Generations

The Warning Signs of Diminished Financial Capacity in Older Adults

Article excerpt

Maintaining a checkbook may be one of the first financial skills to go in cognitively impaired elders- how to spot that and other signs of trouble.

People who develop Alzheimer's Disease (AD) rapidly lose financial skills and decisionmaking abilities, and family members or other designees must intervene early on. For example, individuals with mild AD are already at substantial risk for impaired financial skills. In the mild stage, such impairments may affect basic skills, such as counting coins and currency, and more complex skills, such as managing a checkbook or paying bills (Marson et al., 2000).

Declines in money management skills appear to occur early in the clinical disease process and may even precede a diagnosis of AD (Triebel et al., 2009). For example, individuals with amnestic mild cognitive impairment (MCI), which in many cases is a prodromal stage of AD (Petersen et al., 2001), are also at high risk for declining abilities in complex skills such as checkbook and bank statement management (Triebel et al., 2009; Griffith et al., 2003). Diagnoses of MCI or mild AD should raise red flags for family members about probable financial capacity impairment.

Loss of financial capacity has important economic and psychological consequences for individuals with dementia and their families. Impaired individuals are at risk for making decisions that jeopardize assets needed for long-term care, or that are intended for testamentary distribution to family members (Marson et al., 2000).

People with diminished financial capacity may also be at risk for abuse (Marson et al., 2000) and financial exploitation (Nerenberg, 1996), including consumer fraud and other financial scams (Marson et al., 2000; Birmingham News, 1996). Accordingly, early detection of impaired financial skills and prompt intervention are essential for protecting the economic resources and emotional well-being of impaired individuals and their families (Marson et al., 2000). Warning signs of declining financial capacity may be subtle at first, and family members may be slow or unwilling to recognize them. Furthermore, because of the loss of self-awareness and insight associated with AD, many individuals with late MCI or early AD do not recognize these changes in themselves (Wadley, Harrell, and Marson, 2003; Okonkwo et al., 2008).

This article focuses on early warning signs of diminished financial capacity, with an emphasis on people with MCI and early-stage dementia from AD. Our goal is to increase awareness of the early changes in financial skills that commonly occur in individuals with MCI and early AD. Improved public awareness and recognition of warning signs will hopefully lead to proactive financial and legal planning and effective intervention, which will protect individuals and their families from the economic, psychological, and legal hardships of financial incapacity (Widera et al., 2011).

Prior Level of Financial Functioning

In addressing specific warning signs, it's important to consider a person's prior level of financial functioning. "Warning signs" suggest a change has occurred in a person's functioning relative to a prior lifetime baseline.

Individuals' financial experiences can vary widely because of educational, socioeconomic, occupational, and other factors. For example, take someone who in the past was very independent, meticulous, and detail-oriented regarding finances, but who now forgets to pay bills on time and who increasingly must rely on others to make financial decisions. There is a clear departure from the person's premorbid financial ability level or baseline. This situation differs from someone who has never been skilled at managing personal finances and who has a lifelong pattern of difficulty with finances. In the latter scenario, the individual's current financial problems are simply the newest example of his or her marginal ability to manage money, and likely do not represent a change in functional level or underlying cognitive or emotional status. …

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