Dementia and Giving Money Away: Warning Signs & Protection

Financial judgment is often one of the first abilities affected by cognitive decline. Understanding this connection helps families recognize problems early.

• Executive function decline - Planning, organizing, and decision-making deteriorate.
• Impaired judgment - Can't assess whether a request for money is reasonable.
• Memory loss - Forgets they already gave money, or doesn't recall transactions.
• Difficulty with numbers - Can't balance a checkbook or understand account balances.
• Emotional vulnerability - More susceptible to manipulation and emotional appeals.
• Loss of skepticism - The healthy suspicion that protects against scams diminishes.

These behaviors may indicate a loved one's cognitive decline is affecting their finances:

• Unpaid bills - Despite having money, utilities or mortgage goes unpaid.
• Unusual purchases - Buying things they don't need or can't use.
• Charitable giving increase - Giving much more than usual to charities, often multiple checks.
• Susceptibility to solicitations - Responding to every mail offer or phone pitch.
• Missing money - Cash disappearing without explanation.
• Secretive behavior - Hiding financial activity from family.
• New "helpers" - Strangers offering to assist with finances.
• Difficulty with simple tasks - Can't make change, tip appropriately, or manage ATM.

People with dementia are prime targets for financial exploitation. Exploiters can be strangers or family members.

• Stranger exploitation - Scammers, fake charities, telemarketing fraud, romance scams.
• Family exploitation - A relative taking advantage of access and trust.
• Caregiver exploitation - Paid caregivers stealing or manipulating.
• Professional exploitation - Advisors, attorneys, or agents abusing position.
• Signs to watch - Isolation, new advisors, changed documents, defensive behavior.

These steps can protect a loved one with dementia from financial harm:

1. 1Establish power of attorney early - While the person still has capacity to grant it.
2. 2Simplify finances - Consolidate accounts, set up autopay, reduce cash access.
3. 3Add a trusted contact - Banks can contact a designated person about concerns.
4. 4Set up account alerts - Get notifications of large transactions.
5. 5Limit new accounts - Credit freeze prevents new accounts being opened.
6. 6Monitor regularly - Review statements, transactions, and mail.
7. 7Reduce solicitations - Register for Do Not Call, opt out of prescreened offers.
8. 8Keep important documents safe - Secure checkbooks, credit cards, and IDs.

Balancing autonomy with protection is difficult. Consider intervention when:

• Active exploitation - Clear signs someone is taking advantage.
• Basic needs at risk - Can't pay for housing, food, or medical care.
• Significant losses - Large sums being lost to scams or bad decisions.
• Safety concerns - Dangerous living conditions due to financial neglect.
• Legal problems - Tax issues, lawsuits, or creditor problems.

When informal help isn't enough, legal options exist:

• Power of Attorney - Person grants authority to someone to act on their behalf. Must be done while they have capacity.
• Representative Payee - Social Security can appoint someone to manage SS benefits.
• Conservatorship/Guardianship - Court appoints someone to manage finances. Requires legal proceeding.
• Trust - Assets transferred to trust with professional trustee management.
• Bank restrictions - Financial institutions can limit account access with proper documentation.