From 13 to 19 May, Alzheimer’s UK runs its annual “Dementia Action Week” campaign. The campaign aims to raise awareness about the illness, and help patients and carers to receive the support they need.
The World Health Organization reports that there are 55 million people living with dementia worldwide. With almost 10 million new cases every year, many of us will be affected either directly or indirectly during our lifetimes.
Dementia can be a devastating disease, and one of the effects that can be overlooked is its impact on your finances. Read on to learn why this is, and how your financial planner can help you to protect your wealth from the impact of a potential future diagnosis.
Dementia can affect how you manage your finances
Since dementia affects your memory and cognitive ability, it can become challenging to manage your money if you develop the condition.
This can be caused by several factors, including the following.
- You may forget to pay bills or transfer payments, leaving you vulnerable to late payment charges or fines.
- You might be more vulnerable to scams.
- It may take you longer to make decisions about how to spend your money.
The National Institute on Aging has found that dementia can affect how you manage your money years before you are diagnosed with the disease.
In the study, researchers found that people who had dementia were more likely to have lower-than-average credit scores two-and-a-half years before their diagnosis than people who did not develop the disease. They were also more likely to have missed credit card payments up to six years prior to their diagnosis.
Your financial planner can help you prepare for the financial impact of a future dementia diagnosis
Fortunately, there are some things you can do to prepare for the financial impact of a future dementia diagnosis that could mitigate its impact on your wealth. Your financial planner can advise you of the most sensible steps to take, which might include the following.
1. Set up a Lasting Power of Attorney
A Lasting Power of Attorney (LPA) is a legal document that you can create to give a trusted person permission to manage your finances in the event that you lose the mental capacity to do this for yourself. In England, you can create one for your financial matters, and another for your healthcare decisions.
Importantly, you have to put an LPA in place before you lose the mental capacity to do so.
Without an LPA in place, your loved ones would need to apply to the Court of Protection to be allowed to manage your finances for you. This can be very time-consuming and costly at an already stressful time for you all. So, it could be worthwhile taking the time to set up an LPA sooner rather than later.
2. Ensure you set some money aside to cover the cost of later-life care
In its advanced stages, dementia can make it difficult for you to complete ordinary everyday tasks, so you may require specialist care later in life. This can be costly because of the level of support that you may need.
Alzheimer’s UK reports that this type of specialist care typically costs around £100,000 and, for some, the cost could climb as high as £500,000.
Your planner can help you to identify how much is a sensible amount to set aside for this possibility and create a plan that enables you to earmark these funds without affecting your ability to achieve other goals.
3. Take out appropriate financial protection
It may also be sensible to consider whether financial protection could help in the event that you develop dementia.
Some critical illness policies cover the disease, meaning that if you are diagnosed during the term of the policy, you could receive a lump sum payout to help you cover the associated costs. This might help you to pay for health and social care, essential bills, or any changes you may need to make to your home to make it more accessible.
Your planner can help you to find a policy that offers the cover you need, providing valuable peace of mind.
4. Review and update your will regularly
We recommend that everyone reviews and updates their will at least every five years or after milestone events such as:
- Getting married or remarried
- Having a child or grandchild
- Buying or selling property
- Separating from or divorcing a previous partner.
This is especially important when it comes to protecting your estate from the financial impact of a potential future dementia diagnosis. In order for a will to be legally valid, you must be of sound mind when writing or updating it.
So, if you are diagnosed with dementia, it may be more difficult to update your will.
If a loved one has dementia, your own finances could be indirectly affected as well
Dementia can be devastating for those diagnosed, but if a loved one develops dementia, it could also affect your own finances.
Carers UK reports that, in 2021, there were 2.5 million unpaid carers in employment in England and Wales. And 75% of carers in employment are concerned about how they will continue to juggle their work and care responsibilities.
Your financial planner could support you by offering guidance about how to manage your finances if you need to care for a loved one with dementia.
The team at Barwells Wealth have all undergone Dementia Friend training to support you and your family
Here at Barwells Wealth, we understand that living with, or supporting someone with, dementia can present an array of challenges, not just financial. That’s why everyone on our team has undergone Dementia Friend training so that we can support our clients, community, and friends.
As Dementia Friends, we have all committed to taking action to help those around us who are affected by dementia, so you can feel reassured that anyone on the team can help or support you in this.
If you’d like to learn more about how we can help you protect your wealth from the financial impact of a dementia diagnosis or other unforeseen circumstances, please reach out.
You can get in touch by emailing us at financial@barwells-wealth.co.uk or by phone on 01273 086 311.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
The Financial Conduct Authority does not regulate estate planning, Lasting Powers of Attorney, or will writing.
Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.
Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.
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