If you’ve witnessed dementia first hand, you’ll understand the profound challenges it can bring, both emotionally and practically.
As people live longer, dementia is becoming increasingly common, and the Alzheimer’s Society estimates that 1 in 3 people born in the UK today will develop it during their lifetime.
Financial management is one of many areas that may become more complex as cognitive abilities decline, and it’s important to address this early to protect your wealth if you are diagnosed with dementia.
So, whether you’re planning for yourself or supporting a loved one, here are four ways a financial planner can help you prepare for the potential effects of dementia.
1. Help you register a Lasting Power of Attorney
A Lasting Power of Attorney (LPA) is a legal document that allows you to appoint someone you trust to manage your health or financial affairs if you’re no longer able to do so.
If you have dementia, an LPA is crucial as there are many important decisions you may struggle to make, even in the early stages.
You must set up and register your LPA while you’re still mentally capable. If your dementia progresses before you’ve taken this step, your family may need to go through the Court of Protection to gain similar authority, which can be a lengthy and stressful process.
A financial planner can help you build a clear and organised financial plan that’s easy for your appointed attorney to follow if they ever need to step in. They can also assist you in choosing a qualified solicitor to officially register the LPA, and later collaborate with your LPA to help make sure your intentions are properly carried out.
2. Streamline your financial affairs
Over time, it’s easy to accumulate multiple bank accounts, pensions, investments, and other assets that require managing.
While you may be able to stay on top of multiple income streams, tax liabilities, and loan repayments when you’re well, they are likely to become overwhelming if your memory and decision-making capacities diminish.
A financial planner can help you to streamline and simplify your finances. This might involve consolidating accounts or setting up automated payments.
By taking these steps, you can help reduce the chances of errors, fraud, or missed payments, and make it easier for someone else – such as an LPA – to take over when necessary.
3. Plan for the costs of care
As dementia progresses, the need for professional care often increases.
The Alzheimer’s Society estimates that someone living with dementia typically spends around £100,000 on care over their lifetime.
This kind of expense can catch you off guard if there’s no plan in place and could considerably reduce the size of your estate.
A financial planner can work with you to project potential care costs and develop strategies to fund them. This might include using cashflow modelling to map out the impact of care on your financial standing or exploring different annuities that may be suitable for your situation.
They can also guide you through estate planning options like setting up trusts or gifting, which can help preserve your legacy for your beneficiaries and reduce your exposure to Inheritance Tax.
4. Keep your will and estate plan up to date
Although many people live for years following a dementia diagnosis, you need to have legal capacity to make or amend a will.
As such, if you don’t update your will and are then diagnosed with dementia, you risk missing the opportunity to reflect important life changes, such as the birth of a grandchild or the death of a loved one.
As well as regularly updating your will, you might also consider writing a letter of wishes. A letter of wishes is a personal document offering guidance to your executors about how you’d like your estate to be managed, particularly in situations that may not be covered by your will. While not legally binding, it can offer insight into your intentions and wishes after you’re gone.
A financial planner can collaborate with your solicitor to ensure that your estate plan is both up to date and aligned with your broader financial goals. This can help make sure you leave behind a legacy that reflects your values and intentions.
A financial planner can help you prepare for some of the challenges posed by dementia
Dementia presents many challenges to everyday life, and financial management is just one area that can be significantly affected. However, because your financial wellbeing plays such a crucial role in maintaining independence and quality of life, it’s important not to overlook it.
By starting early and working closely with a financial planner, you can protect your finances, reduce stress for your loved ones, and ensure your wishes are respected, no matter what the future brings.
To speak to a financial planner, get in touch.
Email us at hello@vwmwealth.com or call us on 0141 229 4004.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate estate planning, cashflow planning, trusts, Lasting Powers of Attorney, or will writing.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
