Q:What is “diminished financial capacity,” and why is it so dangerous for seniors? —Concerned Caretaker
The National Institute on Aging estimates that nearly half of all Americans will develop some form of dementia, such as Alzheimer’s Disease, during their lifetime. And while the cognitive decline brought on by dementia affects a variety of different mental functions, one of the first mental abilities to go is one’s “financial capacity.”
Financial capacity refers to the ability to manage money and make wise financial decisions. Cognitive decline brought on by dementia often develops slowly over many years, so a diminished financial capacity frequently goes unnoticed—often until it’s too late.
Moreover, studies have shown that seniors’ confidence in their money-management skills can actually increase as they age, which puts them in a perilous position. As seniors begin to experience difficulty managing their money, they don’t realize they’re making poor choices, which makes them easy targets for financial exploitation, fraud, and abuse.
As a Personal Family Lawyer®, we can help you put estate planning tools in place to protect your elderly family members and their assets from the cognitive decline brought on by dementia and other forms of incapacity.