The possibility of dementia or other forms of diminished capacity among older clients begs the need for technical estate planning and thoughtful coordination with their families.
That was the key takeaway from a presentation at the Financial Planning Association Retreat in Oak Brook, Illinois, last month, by Michael Haubrich, a certified senior advisor who is the founder of Mount Pleasant, Wisconsin-based Financial Service Group. Customer demand for stewardship during the aging process, available professional development through training and certification, and estate documents for those suffering diminished capacity give advisors “a great opportunity for us to add value to our client relationships,” Haubrich said.
Advisors also carry the power to identify and prevent the all-too-common abuse of vulnerable older adults that could amount to several tens, or even hundreds, of billions of dollars each year.
“All elder abuse is built on the foundation of isolation,” Haubrich said. “That’s where we as financial planners can play a pivotal role in making sure that isolation doesn’t become part of the foundation that our clients find themselves with, in the form of some type of elder abuse.”
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Dementia numbers and costs
Fortunately, Haubrich shared a lot of resources that advisors can use in the struggle to stop abusive or fraudulent behavior and plan ahead with their clients. For starters, the sheer expense of aging mounts quickly in an environment in which 10,000 baby boomers will turn 65 every day until 2030 and 7 out of 10 people will require long-term care at some point, according to insurance and caregiving firm Genworth Financial.
The company assists planners, older adults and their families with planning for the cost through an annual report on the cost of care and a database enabling them to track the level of expenses based on ZIP code and timelines. The staggering numbers show why planners can be so beneficial to clients: In 2023, the national median costs per month started at $2,058 for adult day health care or $5,350 for an assisted living facility, with still higher expenses of around $6,000 in home-based services and about $9,000 to $10,000 for rooms in nursing homes.
And the chances of Alzheimer’s disease, diminished capacity or mild cognitive impairment (MCI) rise with age, according to a 2022 article in FPA’s Journal of Financial Planning by Chris Heye, the founder of Whealthcare Planning and Whealthcare Solutions.
“Roughly 10% of adults aged 65 have dementia or MCI,” Heye wrote. “This percentage increases as we get older, accelerating rapidly as adults reach their mid-70s. By age 82, there is a greater than 50% chance that a person has either dementia or MCI. By the time a person reaches age 90, there is more than an 80% chance they have dementia or MCI.”
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Training and tools to stop elder abuse and fraud
In terms of general resources, Haubrich recommended that planners consult the Family Caregiver Alliance and Kasem Cares, an elder abuse awareness and prevention nonprofit launched by Kerri Kasem, the daughter of the late radio personality Casey Kasem.
The circumstances of his 2014 passing and his children’s wrongful death and elder abuse case against Kasem’s widow formed the subject of a 2022 podcast series called “Bitter Blood.” Other high-profile elder abuse cases include those of Mickey Rooney, Stan Lee and Brooke Astor.
More specifically, Haubrich called out the writing and eldercare services, education and coaching provided by Annalee Kruger and Bob Mauterstock of Plan For Life Now. Kruger and Mauterstock worked with FPA to launch an “elder planning specialist” program for planners, and Haubrich is one of the professionals from many fields who have obtained the certified senior advisor designation through the Society of Certified Senior Advisors.
Whether they have the designation or not, advisors should start a healthy dialogue between clients and their families to ensure that they have arrived at a plan for the future, Haubrich said. His firm facilitates virtual or in-person meetings it refers to as a “caring hearts conversation.”
The goal of the discussion isn’t to “project our attitudes, values and beliefs around long-term care, but understand what the clients and their families, attitudes, values and beliefs are around long-term care,” Haubrich said. And that simple step will “really profoundly impact your practice and protect your clients and their families from elder abuse,” he noted.
“We get everyone together, and we want to have that opportunity for them to express what role they want to play as a family member,” Haubrich said. “It’s focused on care planning, but it goes beyond that. We want to find out what each individual member of the family wants to have as their opportunity to participate in the care of mom and dad, or if it’s just love.”
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Essential documents to stop abuse and prepare
At the same time, that discussion and future meetings will enable the families to talk through any concerns about their estate plan and confirm that they have taken steps such as appointing a trustee and complete important documents like an “incapacity agreement” and, of course, a healthcare power of attorney form, he noted.
The latter represents such an important area that it often takes up most of the time. It leads to often-contentious topics like when the older clients can no longer live alone, whether they can continue to drive and which relative is in the best position to be the ultimate decision-maker in many healthcare issues someday.
Haubrich has referred clients to a physical therapist who can evaluate people’s ability to drive, and he knows of a “fee-for-service healthcare advocate” who can be present in collaboration with family members who live too far away to be there frequently.
“Just because somebody goes into assisted living, the game is not over. The game is just starting,” Haubrich said. “The healthcare power of attorney’s most important role is healthcare advocacy, and, any time a loved one is in a facility, you have to have eyes on them, at least every other day, preferably every day.”
The other “really powerful tool” for advisors and clients comes from the incapacity agreement, which “is like fire insurance on your house,” he said. The document gives planners legal protection in the event that they erroneously raise the alarm of potential abuse while securing clients’ written agreement that an advisor can check with a designated family member or another trusted contact before proceeding with any suspicious transactions.
Haubrich shared two stories about his use of the document, including in an intervention against “one of the most sophisticated scams I’ve ever seen” just a few weeks earlier. In the first instance, the niece of an older client who sought to give a neighbor $50,000 successfully vetoed the full transfer of those assets.
And, in the second, more recent example, identity thieves posing as FBI and Treasury Department agents contacted an older couple to tell them they were under investigation for money laundering and cocaine trafficking and needed to pay a large sum of money that would later be reimbursed in order to catch the cartel. The clients’ kids blocked massive fraud losses after their parents asked the firm to set up the necessary outlays toward buying a condo in Mexico for $900,000 in less than four days.
“We didn’t hear any more from the bad guys, and, more importantly, my clients were saved,” Haubrich said. “But it was that incapacity agreement that allowed me to be in position to be able to hit them up with, ‘Hey, this isn’t going to happen.'”
