The Role of a Financial Advisor in Dementia Care

By Bob Toomey & Scott Schill

The determination of an Alzheimer’s diagnosis for a loved one, as with other progressive diseases, can feel devastating for the entire family. The road ahead feels uncertain, giving rise to questions and fears. Among the most common concerns after a diagnosis are burdening loved ones and putting the family’s hard-earned nest egg at risk as costs mount. There is both a financial and legal aspect to finding greater peace of mind following an Alzheimer’s diagnosis. The good news is that proper financial, estate, and longevity planning can help protect the family financially while lightening the burden on loved ones.

Financial planners deal with situations where they are called upon to provide advice to the family or a caregiver regarding a number of aspects of the diagnosed person’s finances. One of the biggest strengths of financial planning is it can provide a sound framework for facing future uncertainties in a rational and constructive manner. Having a reasonable understanding of the financial implications of the disease and doing contingency planning around the spectrum of potential outcomes can go a long way in helping the family better plan for the welfare of both the person living with the disease and the family. The role of the financial planner is to use the planning tools (software) to provide the caregiver advice on how to best adjust a financial plan for the new path in their loved one’s life.

Prognosis is important in forecasting expenses

From a financial planning perspective, several issues tend to come up repeatedly in these types of cases that need to be addressed, including not only the prognosis but also things such as asset analysis/adequacy, contingency planning, and risk management. Understanding the prognosis for the patient is important because it provides the planner with a reasonable timeframe over which certain expenses might change. This can then be combined with an analysis of the person’s assets (investments) and income to support the most likely path of expenses related to medical care, therapy, and changes in living arrangements. Given the updated expense forecast, a financial planner can then determine the best use of the person’s financial resources to help meet those expenses as well as other goals that may be important to the family, such as legacy goals.

Risk Management

An important part of a financial planner’s role is risk management. What risks are we trying to manage or mitigate? First, we need to reduce the risk of our client running out of money within the lifespan of the plan. We also want to reduce risks in their asset resources, such as investments, by making sure the risk, or volatility, of their asset base is as low as possible. Another way we can manage risk as planners is to do contingency planning. This is done using financial planning tools to run multiple plan scenarios based on the probability of various potential outcomes. Contingency planning includes running scenarios such as best-case, most likely-case, and worst-case plans. Running multiple scenarios can provide the caregiver with valuable information in managing the financial risk of a “worst-case” outcome and preparing for that outcome in advance.

Medicaid Access Planning

Another important aspect of advance planning in cases such as Alzheimer’s is the legal side. A key question is, “how can the family protect their hard-earned nest-egg from long-term care expenses?” For married couples, in most cases, an elder law attorney can get the Alzheimer’s patient qualified for government help with expenses without spending down any of the couple’s assets. This is because the state doesn’t want to impoverish the well-spouse. This is called Medicaid access planning. What happens when the first spouse passes? If the surviving spouse needed help down the road she would have to spend down her assets. So to cover that eventuality, a testamentary trust can be created in the wills. By doing this, when the first spouse passes, half of the estate is placed in the testamentary trust and is thereby immediately and automatically protected from spend-down.

Special estate planning

Traditional estate planning is focused on two areas. First, providing order after we pass with a will or trust that reflects our wishes and protects against estate taxes and elder abuse. Second, empowering the people we love and trust to make decisions for us during our life if we need their help via powers of attorney for healthcare and finances (durable power of attorney) and end-of-life decisions ( via a healthcare directive). These are important and necessary tools but the loved ones of someone living with Alzheimer’s need additional tools to lighten their burden. This is where special estate planning comes in. The system often leaves the family of someone living with Alzheimer’s overwhelmed, adrift, and sometimes in conflict over what’s best for the Alzheimer’s sufferer. To help the family, we need special kinds of powers of attorney, ones that don’t just give the power to act–which, when one thinks about it, is really a burden–but gives guidance and resources to lighten the burden. This could include things like a professional healthcare advocate for the family to help navigate our complex healthcare system, and a geriatric care manager. We also want to avoid the common issues that often lead to family drama and burden down the road even among the best families. In sum, we want to empower the family to make the system work a little bit more for the family than it often feels like. 

For the person living with an Alzheimer’s diagnosis, shaping their own story, autonomy and dignity, are of the highest concern. For this, the Alzheimer’s patient should complete an estate planning tool called a Dementia Directive. A Dementia Directive is a simple and effective way to make sure the medical care you get is closer to the care you would want. Families often face difficult medical decisions if their loved one has dementia. By referring to a Dementia Directive, they can feel more sure that the decisions they make reflect what their loved one would have wanted.

From a financial planning standpoint, advance planning and preparation can make a huge beneficial difference for the family and the patient. The key to successful advance planning in a progressive disease like Alzheimer’s is to address it head-on and right away. Updating financial and contingency plans are important ways in which a financial planner can provide invaluable advice and information in helping the caregiver make the best financial decisions for the patient. Engaging the services of a competent attorney in addressing estate planning and longevity issues would be the other key element in proper preparation for the eventualities of the road ahead for the patient and the family. Finding an attorney who deals specifically with planning related to progressive diseases like Alzheimer’s can be a big plus, particularly in developing coping strategies beyond standard estate planning.

We are so grateful to our volunteers and community members who give their time to share their expertise in areas like financial planning for those facing Alzheimer’s and their caregivers. Together, we can support and lift each other up today and work to find a cure for tomorrow.

About the Authors

Bob Toomey

Bob has over 35 years of experience in the investment management and financial planning fields. Bob holds the Certified Financial Planner (CFP®) and Chartered Financial Analyst (CFA®) designations. In addition to financial planning, Bob’s work with S.R. Schill focuses on the special needs of a number of the firm’s high net worth clients. Bob also serves as the firm’s Director of Research, which entails market and security analysis and supporting the firm’s investment strategy committee and investment policy. Prior to joining S.R. Schill 13 years ago, Bob worked for several national financial firms, including SunLife of Canada and RBC Wealth Management.

Scott Schill

As a Northwest native with two sets of parents living nearby and a frequent volunteer with the Senior Center of West Seattle and Jewish Family Service, the message that longevity is about relationships resonates deeply with Scott. Prior to founding Thrive Longevity Law and joining S. R. Schill & Associates as Director, Longevity Law & Planning, he served as Chief Legal Officer of AgingOptions and partner at Life Point Law. Before a searing experience advocating for his Mom turned him toward Longevity Law, his practice focused on complex commercial litigation at Yarmuth Wilsdon Calfo PLLC and Perkins Coie LLP in Seattle. 

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