Don't Let Cognitive Decline Derail Well-Laid Financial Plans

What You Need to Know

The problems that come with aging are “inevitable but addressable,” attorney Mitch Mitchell says.
Naming the spouse as the sole decision-maker is not a solid long-term plan.
Keeping RMDs on track is one way advisors can help clients with Alzheimer’s and their families.

Data from sources like the U.S. Census Bureau shows in no uncertain terms that the U.S. population has grown older over the prior two decades.

Since 2000, for example, the national median age in the United States has increased by 3.4 years, with the largest single-year gain of 0.3 years coming in 2021, when the median age reached 38.8 years. This may seem young relative to the life expectancies of older Americans, but the median age in 1960 was significantly lower, at 29.5 years.

In the experience of Mitch Mitchell, a board certified attorney in estate planning and probate, the aging population is a serious challenge for the public to confront, and as such, it is of great importance to the work of financial and estate planners.

Mitchell, who is now working for the online estate planning and probate platform Trust & Will, spent more than a decade in private practice. In that time, he prepared wills, arranged trusts and created incapacity plan documents for hundreds of clients.

In a new interview with ThinkAdvisor, Mitchell said the experience in private practice and at T&W has underscored a pressing need for advisors and legal experts to spotlight all the challenges that come along with aging — financial, physical, mental and otherwise.

According to Mitchell, advisors are in a fantastic position to help their clients prepare for the “inevitable but addressable” issues that come along with old age, from the propensity for social isolation to the greater prevalence of Alzheimer’s disease and other forms of dementia.

Such challenges can and will have a financially devastating effect on those who don’t make a plan. Fortunately, Mitchell says, there are many concrete steps that can be taken in advance to help ease the undeniable challenges of aging.

Becoming Vulnerable

“Advisors have to understand the importance of the topic of cognitive decline and other age-related issues,” Mitchell says. “A frank way to put this is that, if we live long enough and are fortunate enough to not experience a fatal accident or disease at a younger age, we’re all going to become more vulnerable later in life.”

Not only do individuals become more vulnerable to cognitive disease as they age, but they also become more vulnerable to potentially negative influences. They may have a harder time keeping up with technological changes, for example, or their network of trusted friends and confidants begins to rapidly shrink.

“It is often the case that, as people grow older, they are just more isolated, and they become more susceptible to scams,” Mitchell says. “A big part of the problem today is that it’s easier than ever to quickly transfer money via the internet. You used to have to write a check or walk into a bank. Today it’s instant, and transfers are often irreversible.”

According to Mitchell, the current scam-rich environment is just one additional factor that should drive aging people to put a plan into place that addresses the possibility of incapacity. Another is the growing prevalence of Alzheimer’s disease among older adults.

Planning When Disease Is a Factor

Based on his personal experience, Mitchell says it is both a great challenge and a great opportunity to help a client and their family when a diagnosis of Alzheimer’s is put on the table.

“Assuming the diagnosis is made in the early stage, this really starts a ticking clock and sparks a need for immediate action,” Mitchell says. “While the client still has the capacity to make decisions in their best interest, this is the time that we want to be naming the legal and financial agents and documenting the person’s wishes and intentions.”

Mitchell says this may seem like an obvious statement, but the dramatic reality of a disease diagnosis can be profoundly distressing and distracting for a client and their family.

“Often, a client will just instinctively say that they are going to entrust their spouse with everything,” Mitchell observes. “As the advisor or trust attorney, we have to help them see that this is not a full plan. We have to set out a plan that will be reliable for years to come.”

While it often makes sense for a spouse to play a leading role in the health and financial decision-making, this game plan might not be sound in the long term — especially when a client couple is close in age and health outlook.