For loved ones experiencing a memory impairment, the effects of dementia can slowly take away their ability to handle familiar tasks, like managing their finances. Watching a loved one struggle is undeniably hard, but stepping in early, before mistakes happen, is crucial for their well-being. While it may be difficult to accept, taking protective measures can safeguard their financial well-being and ensure their peace of mind during this uneasy time.

When it becomes clear that a loved one is struggling to manage their finances, knowing how to step in can feel overwhelming. Use this guide for helpful actions you can take with confidence:

Look for the Early Warning Signs

The first step is simply paying attention. Families often don’t realize there’s an issue until something goes financially wrong. Keep an eye out for signs that your loved one may be having trouble, such as:

• Unpaid or repeatedly paid bills.
• Confusion about recent purchases or bank activity.
• Unusual spending habits or frequent cash withdrawals.
• Trouble balancing a checkbook or navigating online banking.
• Anxiety or defensiveness when talking about finances.

Gather Financial Information

Before approaching your loved one with your concerns, first collect and review their key financial documents. This may include:

• Bank and investment account details
• Credit card statements
• Mortgage and loan paperwork
• Insurance policies
• Social security and pension information
• Recent tax returns

Understanding their full financial picture will help you see what needs attention, ensure nothing is overlooked, and make it easier to manage or monitor their finances moving forward.

Start the Conversation

Talking about finances can be uncomfortable, especially with a parent or older family member, but it’s a necessary step. A thoughtful, caring conversation can truly make all the difference. Try to approach the topic gently and always be considerate of their feelings.

Choose a quiet, private time to talk when you won’t be interrupted, allowing for a calm and focused discussion. If appropriate, slowly bring up specific examples of financial confusion or mistakes they may have overlooked to help explain your concerns in a clear and caring way. Most importantly, reassurance can go a long way. Explain to your loved one that your goal is to support and protect them, not take control.

Seek a Medical Diagnosis

If you think your loved one may be experiencing a memory impairment and hasn’t received a diagnosis yet, it’s important to schedule an appointment with their primary care doctor or a neurologist. A confirmed dementia diagnosis can help justify the need for financial assistance and may be necessary for future legal or financial decisions.

In addition to confirming a condition, the doctor can also help assess what stage your loved one is in and what kind of support they currently need. Looking for additional guidance and support during this time? The 7 Stages of Dementia offers a deeper insight into what to expect and how to navigate each stage with care.

Secure Legal Authority

Helping with and managing a loved one’s finances legally requires the right documentation. Ideally, these should be arranged before your loved one loses the ability to make decisions. If nothing is in place yet, you still have options. Here are the two you should consider:

Power of Attorney (POA) – A secure POA allows a trusted person (the agent) to manage financial matters for your loved one (the principal). This document must be signed while your loved one is still mentally able. You can also consider consulting an elder law attorney to make sure the POA understands and meets their unique needs.

Guardianship – If your loved one can no longer legally sign a POA due to cognitive decline, you may need to petition the court for guardianship. This legal process can be time-consuming and requires evidence that your loved one is no longer able to manage their affairs alone. In some cases, it may be the only path forward.

Set Up Financial Safeguards

After deciding on and securing legal authority, it’s time to establish protections to preserve your loved one’s financial security.

• Create a budget: Ensure that key expenses like housing, healthcare, and food are covered.
• Automate bill payments: This helps prevent missed payments, late fees, and service interruptions.
• Limit account access: Reduce credit limits, cancel unnecessary cards, and consider setting a daily, weekly, or monthly spending limit.
• Monitor bank activity: Regularly check transactions to identify errors or potential fraud.
• Freeze credit reports: This prevents scammers from opening new accounts in your loved one’s name.

Protect Against Financial Exploitation

The truth is, older adults with dementia can be especially vulnerable to financial scams, and sometimes the risk comes from people they know. To protect your loved one, always keep an eye out for signs of manipulation or pressure from others and warn them about common scams like fake IRS calls, sweepstakes, or “grandparent” scams.

Regularly reviewing their bank and credit card statements is also a great tool to catch unfamiliar charges and report any suspicious activity to Adult Protective Services or law enforcement. Family caregivers should be especially cautious about their own actions, keeping thorough records to avoid any appearance of financial mismanagement.

Reach Out for Help

Managing a loved one’s finances can feel like a big job, but you don’t have to do it alone. Keep close family and friends in the loop, especially if you’re acting as power of attorney or guardian. Sharing updates and explaining your role can help avoid confusion and prevent conflict. A simple family meeting can go a long way in making caregiving a team effort and reducing stress for everyone.

Getting help from professionals can make things easier, too. A financial advisor can guide you on managing money and planning ahead, an accountant can help with taxes and day-to-day finances, and a geriatric care manager can connect you with dementia care resources. With the right team, you can feel more confident handling your loved one’s financial and care needs.

Stepping in to manage a loved one’s finances during their journey with dementia is never easy, but it’s one of the most important ways you can support their well-being. With early action, open communication, and the right tools in place, you can help protect them from financial harm and reduce stress for the whole family. Remember, you’re not alone in this. There are people, professionals, and resources ready to help you every step of the way. By approaching the process with care and compassion, you can make a meaningful difference in your loved one’s life.