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Facing the early signs of memory loss can be unsettling, but it’s also a critical time to act. Creating a strong financial and legal foundation as soon as you can ensures your wishes are honored and your loved ones are protected. Whether for yourself or a loved one, addressing these steps early can bring clarity, peace of mind, and security for the future.
Why You Should Act Now
Mild cognitive impairment (MCI) can progress unpredictably. Legal and financial decisions require “mental competence,” which becomes more challenging to establish as progressive conditions like Alzheimer’s disease or a related dementia advance. Acting sooner rather than later allows you to maintain control, communicate your wishes clearly, and minimize the risk of confusion, conflict, or even exploitation down the road.
Essential Steps to Take at the First Signs of Memory Loss
Here are the essential legal, financial, and long-term planning steps to take:
1. Expand Your Advisors to Include an Estate Planning Attorney
You may already be working with a CFP® Professional, a CPA, and perhaps a Daily Money Manager, but now is the time to add an attorney if you don’t already have one on your team. An experienced estate planning attorney can guide you through the process, ensuring all documents comply with state laws and reflect your unique needs. Early legal consultation is critical because the capacity to make decisions is time sensitive. An attorney can help you plan proactively while you or your loved one are still fully capable of expressing clear preferences. To find a lawyer, contact your local bar association or the National Academy of Elder Law Attorneys.
2. Establish a Durable Power of Attorney
A durable power of attorney designates someone you trust—your “agent”—to handle financial and legal matters if you become incapacitated. This document empowers your agent to manage everything from paying bills and overseeing bank accounts to protecting investments. Without this in place, your family may face costly and lengthy legal proceedings to gain authority over your affairs.
3. Create a Living Will and Healthcare Proxy
A living will outlines your preferences for medical care, such as life support or other interventions, in case you cannot make decisions yourself. Pair this with a healthcare proxy (or medical power of attorney), which names someone to make healthcare decisions on your behalf. Together, these documents ease the burden on loved ones and provide clear guidance during difficult times.
4. Create or Update Your Will and Consider a Trust to Manage Assets
A will, also known as a last will and testament, is simply a document that you create that lets society know what you want to happen to all your possessions upon your death. A trust allows you to designate a trustee to oversee your financial assets. This can be especially helpful if you want to:
- Avoid probate (the legal process of distributing an estate)
- Simplify financial management for a spouse or family member
- Protect assets from misuse or exploitation
Trusts can also provide a smoother transition of assets if cognitive impairment progresses, ensuring your wishes are carried out seamlessly.
5. Update Beneficiaries
Review and update beneficiary designations on bank accounts, retirement plans, life insurance policies, and other financial accounts. Accurate beneficiary information ensures your assets are distributed according to your wishes and prevents disputes or delays.
6. Have Candid Conversations with Loved Ones
Now may be a good time to call a family meeting on finances, your legal documents, and your long-term plans. Sharing your plans with trusted family members or friends is just as important as creating the documents. Open conversations reduce uncertainty, prevent misunderstandings, and ensure your chosen representatives are prepared to act on your behalf.
The Cost of Waiting
Unfortunately, delaying these steps can lead to stressful—and sometimes tragic—situations. For example:
- Legal Battles: If no durable power of attorney exists, families may face court proceedings to gain control over finances, which can be expensive and time-consuming.
- Financial Exploitation: Individuals with cognitive impairment are more vulnerable to scams or undue influence. Proper legal protections can prevent exploitation.
- Medical Confusion: Without a living will or healthcare proxy, loved ones may struggle to make medical decisions under pressure, not knowing what you would have wanted.
Real-Life Lessons
Consider these real-life examples:
- An elderly woman with MCI suffered a stroke and had no healthcare proxy or financial power of attorney in place. Her family faced agonizing decisions during her hospitalization, navigating unclear legal and medical choices.
- A man with MCI was convinced by a caregiver to change his will, leaving his family powerless to stop the exploitation because no durable power of attorney had been created.
Both scenarios could have been avoided with proactive planning.
Take Control While You Can
While discussing end-of-life planning can feel overwhelming, acting now ensures you stay in control of your future. Proactively creating legal documents protects your financial assets, provides clarity for your loved ones, and prevents unnecessary stress during already difficult times. The Alzheimer’s Association has a Legal and Financial Worksheet that can help organize this important information.
If you or a loved one are noticing the first signs of memory loss, don’t wait—start the conversation with trusted estate planning and financial professionals today. By taking these steps, you’re making a lasting gift to yourself and your family: peace of mind and a clear path forward.
Resources
10 Early Signs of Dementia - Alzheimer’s Association
15 Warning Signs of Dementia You Shouldn’t Ignore - AARP
How a Daily Money Manager Helps Your Investment Advisor or CFP® Professional - AADMM
Your Digital Assets and Accounts: What Happens After You're Gone?
5 Myths about Getting Your Affairs in Order
Why a Family Meeting on Finances is a Good Idea
The Importance of Having an Estate Plan (Lakeside Chat)
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Christina Ubl, CFP® CDFA™ of Clute Wealth Management in South Burlington, VT and Plattsburgh, NY, an independent firm that provides strategic financial planning for individuals and small businesses in the Lake Champlain Valley region. Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA SIPC.
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