Money and dementia: The tough conversation we need to have

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In the October issue of Money, I really struggled to answer a question from one of our readers.

Mrs Pilay asked me about how to handle money issues with her partner who had dementia. After reading information about this on the many excellent websites and calling experts in this field, I felt that ageing and money is something we all need to talk about more.

Sure, my wife and I have had our parents and elderly relatives die and have provided love, care and support.

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But the deaths were mainly the result of cancer, heart issues and, in the case of a 96-year-old aunt my wife cared for, just old age.

Yes, there were all the usual problems around cancelling driving licences, power of attorney, living wills, finances and so on, but we had not personally cared for a loved one with dementia. Dementia Australia says that in 2021, 472,000 Australians live with dementia and 1.6 million people provide care to them.

The reality is that many Money readers will know a great deal about dementia and money, but quite a few of us will not. Obviously, I have zero expertise with dementia, but I can say one thing for sure, because we will all die.

We need to have plans for this and discussions with our loved ones about what we would prefer as we age and how our choices will be paid for. You just can't leave this too late.

Without a significant medical breakthrough, Dementia Australia says that some 900,000 will be suffering from dementia in 2050. With these forecast numbers, this must touch either us personally or someone close to us.

The causes, and the steps we can take to lower our risk and manage dementia, I'll leave for you to read about and discuss with your medical advisers.

Here, I'll concentrate on what I do know about - money.

Mrs Pilay was concerned about her husband's Amex card, and the ability to rack up unwanted debt and, of course, the risk of becoming a victim of fraud. I had a few chats with Amex and they were very helpful.

Like all credit card providers, they have a significant investment in fraud detection. And if there is a fraud, money will generally flow back to a credit card customer.

But what about unplanned spending? Here, of course, the right answer is to cancel the credit card, providing you have power of attorney.

That sounds simple, but it's a bit like having to tell a parent they can no longer hold a driving licence.

Obviously, we all secretly hope they will fail a test and have the transport department refuse to issue a licence, then it is not "our fault".

But we cannot sit back and watch an incapable parent or relative driving dangerously. This is a tough one, and it is the same with credit cards. We love to be in control of our money and that is fair enough.

At least with a credit card, there is not only the cancellation option. It seems to me that it makes a heap of sense to reduce the limit and at least minimise the damage from unwanted spending.

I read one case study where the partner of a dementia sufferer let the spending go on and overnight hid the purchased items and returned them for a refund, as it made for a more harmonious relationship.

Let's look at the practical things we need to do while we have our full cognitive capacity.

We need to appoint an enduring power of attorney. This could be an adult child, brother or sister, a trusted friend or the Public Trustee.

Much better for this to be a person who loves you and won't abuse the trust. Then we all need to ensure our will is updated and reflects our current wishes. We have taken our adult kids to these meetings with our lawyers.

Next, get your super in order. This is on my mind: our DIY fund holds some complicated investments, so we are talking to our three adult kids about this. Equally, shutting it down in the future and using a low-cost, large super fund is a good back-up option.

Now we move to record keeping. List your financial documents, house documents, health documents. Basically, we need to get our act together. Now.

Most importantly, start the conversation with those who will care for you. We all hate talking about illness and death, and our kids do have a bit of a chuckle when I talk about potential illness and my death. It is a bit like car accidents. We know more than 1000 a year will die on the roads, but as optimistic humans we think it won't be us or our loved ones.

But death is certain, and illness and a loss of cognitive capacity before death are quite likely.

So, while our kids and, in particular, our grandkids think "Poppi and Nani" will always be healthy and playing with them in the park, and going on holidays and outings, this, of course, is not the reality.

I have only gone to sites like Dementia Australia, MoneySmart and the very well written but confronting DailyCaring to help me write this article.

But I have learnt a lot.

Mind you, DailyCaring's article called "Responding to 4 Common Dementia Accusations: Stealing Money, Stealing Things, Poisoning, Being Held a Prisoner", was not the highlight of my day.

I don't know much about dementia, but at least I know a little and it will be added to our family conversations.

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Paul Clitheroe AM is founder and editorial adviser of Money magazine. He is one of Australia's leading financial voices, responsible for bringing financial insight to Australians through personal finance books, the Money TV show, and this publication, which he established in 1999. Paul is the chair of the Australian Government Financial Literacy Board and is chairman of InvestSMART Financial Services. He is the chair of Financial Literacy at Macquarie University where he is also a Professor with the School of Business and Economics. Click here to ask Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. Please view our disclaimer here.