Alzheimer's Can Devastate on All Fronts

Physician's Money Digest, September30 2004, Volume 11, Issue 18

The recent death of President Ronald Reaganfollowing his 10-year battle with Alzheimer'sdisease is a powerful reminder ofthe need to prepare financially for the care ofa chronically or terminally ill loved one.While Reagan could afford at-home care, manyfamilies can't. A chronic or terminal illness such asAlzheimer's can financially devastate not only the illperson's estate, but the caregiver's as well. The followingare several strategies that can help minimizethe financial impact of caring for a loved one sufferingfrom Alzheimer's:

• Put estate planning documents in place. Mostadults should have basic estate planning documents suchas a will, living will, health care proxy, and financialdurable power of attorney. At the first signs or diagnosisof Alzheimer's disease, these documents must be put intoplace. Without them, providing care can become muchmore legally complicated and expensive. You may needto implement other strategies, too, such as trusts.

• Review their financial resources. Talk to the personabout their financial resources such as bank andinvestment accounts, insurance policies, retirementaccounts, employee benefits, and sources of regularincome such as Social Security and employer pensions.This isn't always easy. A spouse who has leftmanagement of the household's finances to the spousewho's now ill must assume control. Children assumingfinancial control also may have to struggle to getan accurate financial picture from a parent who maybe reluctant to discuss personal finances or didn't keepwell-organized records.

• Start planning immediately. The further aheadyou can plan for the financial consequences ofAlzheimer's, the better. How much care will familymembers be willing or able to provide? Will you needa third-party bill paying service? Will you be able toafford at-home professional care? Visit assisted livingand nursing home facilities well in advance of theneed to actually move.

• Create a spending plan. Once the needs andfinancial resources are clarified, create a spending planthat will balance expenses and income. Try to saveextra money now for the inevitable rise in expensesdown the road.

• Review investments. Because of rising cash-flowneeds, you may want to readjust the investment portfolioin order to keep a larger portion in lower-risk,easily accessible assets such as money markets andshort-term bonds.

• Be aware of tax deductions. Nonspouse caregivers,such as a child, may be able to claim the personas a dependent if they provide more than half oftheir support and satisfy other dependent status rules.Even when caregivers share responsibility, such asamong siblings, tax deductions may be available if, asa group, they provide over half of the support. You'llwant to consult with a tax expert on this to see whatneeds to be done to qualify.

• Review community and government financialresources. Ideally, families will have sufficient resourcesof their own to pay for the person's care. But some familiesmay need government or community assistance.Review eligibility rules for Medicaid, Medicare, SocialSecurity disability income, veterans benefits, and localpublic assistance. Community resources include Meals-on-Wheels, aging associations, and Visiting Nurses.

• Take care of yourself. Caregivers not only makegreat sacrifices of time and sometimes personal health,but frequently personal financial assets. They may payfor care out of their own pocket or they may cut backwork hours or even quit their job to care for someone.Caregivers have to be very cautious here. Cutting backwork hours or quitting a job, for example, hampers theirability to save for their own retirement and their ownfuture health care needs, or to buy something as valuableas their own long-term care insurance. Too much financialsacrifice means they could become a financial burdenon other loved ones years later.

• Seek professional help. A financial planner canhelp improve cash flow, identify tax savings, reviewinvestments, and provide overall financial planning.You'll need an attorney to be sure all legal documents arein order. A geriatric care manager can find appropriateliving facilities or at-home care.

This article has been produced by the Financial Planning Association

(, which is the membership organization for the financial

planning community.