"Widowhood" doesn't only result from the death of a loved one. Many aspects of it can also come from progressive dementia or a sudden stroke that disrupts the roles each partner can play – from emotional support to making financial decisions.  

Over the years, Sarah and Mark had fallen into a comfortable division of financial decision-making. Sarah focused more on the day-to-day expenditures, and Mark devised and implemented longer-term financial strategies. Once a quarter, they had a "finance date" when Mark updated her on allocating their combined incomes and the status of their savings and investments. Sarah would present the changes she wanted or needed to see in their next quarterly budget.

As they sat down in front of the computer for a finance date, Sarah said, "Mark, what we haven't discussed is what we do if one of us is diagnosed with Alzheimer's or becomes incapacitated by a stroke. It may never happen, but that doesn't mean it can't."

While it was one of the conversations most couples would rather not have, they knew it would be the best gift they could give to one another if they ever faced such an event. Sarah jotted down a reminder to have their financial advisor add that topic to their next meeting's agenda.

How significant is the risk of cognitive decline?

The Alzheimer's Association says that nearly 15% of Americans over age 70 have neurodegenerative conditions affecting cognitive function that limit independence in daily activities. Moreover, the symptoms of Alzheimer's disease and related dementias (ADRD) often impair personal financial management. Widely recognized early indicators of ADRD include erratic bill paying, risky financial decisions and vulnerability to financial fraud, but families frequently miss these signals until the disease has progressed. 

In fact, a study linked the medical records of over 80,000 men to their Equifax credit reports. They found an early-warning system: men who would eventually be diagnosed with dementia started missing due dates in their bill paying about six years before diagnosis.

What happens if it's a stroke?

If the spouse who handles the couple's finances has a stroke, there will likely be little warning unless it's not the first one. Instead of having some advanced warning, as in the case of dementia, the healthy spouse may have to absorb the responsibilities immediately of keeping bills paid and resources well managed – in addition to taking on an immense caretaking burden. 

For some reason, much like the need for long-term care, having a stroke is quickly relegated to "Oh, that won't happen to me; that's for someone else" – despite the reality of the statistics. Every 40 seconds, someone in the U.S. has a stroke, totaling 795,000 people each year. Three-quarters are first or new strokes. While stroke risk increases with age, one can happen at any time. A statistic cites that 38% of people hospitalized for stroke were below the age of 65. 

How can you tell it's cognitive decline?

You will know if a stroke has occurred. But how and when will you know if you're dealing with declining cognitive capacity?

Years ago, research established the connection between poor money management and loss of cognitive capacity. Signs could be new difficulty understanding financial concepts that were once familiar or handling simple financial tasks. 

From a functional standpoint, experts consider financial skills the "canary in the coal mine." Driving a car, for example, relies on motor memory, so that ability will not be affected early on. (Signaling a right turn is virtually automatic.) But balancing a checkbook or doing math calculations uses a different part of the brain. Here, the benchmark should be what the person could always do financially – and what has now become a challenge.

Daniel Marson is a clinical neuropsychologist, emeritus professor and past director of the Alzheimer's Disease Center at the University of Alabama at Birmingham. As part of his extensive research into financial capacity in older adults, he identified five financial warning signs of cognitive decline. The warning signs include:

• Memory lapses, such as forgetting to pay (or double paying) bills or periodic taxes.
• Math mistakes in everyday life, such as struggling to calculate the tip in a restaurant or figuring out the details of an investment.
• Poor organization around information, such as disarray in place of a once-neat desk, large amounts of unopened mail or confusion about the timing of events or deadlines.
• Confusion either in comprehending new financial concepts or no longer understanding financial terms that were understood in the past.
• Impaired judgment, such as developing an unrealistic anxiety about finances or showing new interest in get-rich-quick schemes that would never have been considered in the past.

Spouses and family members have no control over whether a loved one becomes one of the adults who develops dementia. And when it does occur, they may hesitate to raise the issue of financial management with that loved one because of how sensitive and volatile the topic may feel.

So what is the solution? Being prepared.

Action steps in preparation

The best way to remove the sensitivity and discomfort of discussing a transfer of decision-making responsibilities is to prepare for the event before it's even a concern.

One way to prepare is to address a series of considerations. It may not be necessary to address every one of them, but the more you take on as a couple, the easier the transition will be should one become necessary.

• Early planning is vital, including creating durable power of attorney documents well in advance for both healthcare and finances.
• Identify and document decision-making processes for each spouse – and update them as they change over time – so it's easier to plan for potential disruptions the healthy spouse will face.
• Establish a support network of trusted family members, close friends and professionals who can help with decision-making in case of cognitive decline or a temporary or permanent health event.
• Designate a power of attorney for finances and one for healthcare so selected individuals can step in smoothly and effectively if needed; also discuss the possible need for legal conservatorship in the absence of designees.
• Explore long-term care planning to deal with the consequences of dementia or a health event – such as the need for assisted living or nursing home care – to protect assets and ensure quality care.
• Organize financial information, including account details, passwords and important documents, to make the information accessible to designated individuals if and when needed.
• Explore technology solutions that help with financial management, including automated bill payments, budgeting apps and tools that simplify financial tasks.
• Educate family members on the potential impact on financial decision-making of cognitive decline or a health event, particularly if their roles and responsibilities could be affected.
• Review investment strategies regularly to ensure they align with the potential need for income in the event of long-term care or increased medical expenses.
• Consult legal and financial professionals specializing in elder law and estate planning to obtain personalized advice and help to implement the necessary legal documents.
• Establish regular check-in schedules with financial professionals to review your financial situation and make adjustments as needed.

Getting help to prepare for financial continuity

At WH Cornerstone, we realize you can't know when life will throw you a curve ball, including an Alzheimer's diagnosis or a debilitating health event. To make such occurrences more manageable and less devastating, we work with clients to prepare for many of life's unexpected challenges. We call it Curve Ball™ Life Planning.

Having to alter roles due to any form of incapacity – including the role of financial decision-making – can be particularly sensitive. We've learned that sensitivity is reduced dramatically if the issue is discussed long before it becomes a reality. Egos can be less involved, and transition steps can be predefined.

Open and empathetic conversations are critical because each couple's situation is unique. We have developed ways to facilitate such discussions and convert the output into robust preparations in case an action plan is ever needed. For help with this process, schedule a call with us. We're here to help.