According to the Alzheimer’s Association, 5.4 million Americans live with Alzheimer’s disease. The disease, which affects one in eight older Americans, can eventually make it impossible for sufferers to manage their finances, but even milder cognitive impairments can cause problems. In some cases, impaired elders have been defrauded by scam artists, securities salesmen, and even relatives after losing their judgment to cognitive impairment.
The possibility of being unable to manage one’s own finances should give every American pause. There are ways to address this situation before it arises. One common recommendation is a durable power of attorney that names a designated agent authorized to handle your finances in the event you become incapacitated. If a power of attorney is not durable, it will terminate once you become impaired.
A “springing” power of attorney is another option. These become effective only once a determination of impairment is made. Two physicians will typically need to make the diagnosis. Because the diagnosis can be difficult to make and doctors are typically reluctant to make it, many attorneys prefer to go with a durable power of attorney, which does not require a diagnosis.
Those who have significant assets should consider appointing a trust company to manage their assets in the event of impairment. The attorney will contact the legal department of the company to ensure that the power of attorney one executes is in an acceptable form.
Powers of attorney are invaluable resources for ensuring your finances will be properly handled in the event of impairment. But it is important to work closely with an attorney throughout the process.
Source: Huffington Post, “The Hidden Danger That Could Destroy Your Savings, Dan Solin, February 12, 2013