Discerning if your Elderly Client is Financially Incapacitated, and if so, then what?

Abstract

The capacity to manage financial affairs is a fundamental aspect of individual autonomy in society and represents a cognitively complex set of knowledge and skills that are sadly particularly vulnerable to cognitive aging and dementia. As yet, there are no published studies of a financial planner’s assessment of a client’s financial capacity. Until recently there have been no pragmatic means to assess a client’s financial capacity. Recent medical discoveries have enabled the financial planner to conduct such an assessment and thereby help their clients both better retain their autonomy and prevent financial exploitation. This Article illuminates the complex interrelationships of neurocognitive change and functional change and clarifies the extent to which specific cognitive impairments translate into instrumental activity of daily living (IADL) impairments. By analyzing recent medical findings, financial planners can now much earlier identify any financial incapacity impairments in clients with mild cognitive impairment (MCI) and Alzheimer's disease (AD), and after which provide guidance to reduce the risk of financial exploitation. The early detection of impaired financial competency will better protect both the emotional well-being and the economic resources of clients possibly suffering from some form of dementia, as well as their families.