Protecting Your Finances If Memory or Decision-Making Declines

Older adult reviewing estate and debt documents with financial advisor.

Who this is for

  • Aging adults and families who want simple, practical steps to stay financially safe if memory or decision-making starts to decline.
  • Caregivers looking for guidance on Powers of Attorney, healthcare decisions, and protecting loved ones from scams and financial abuse.

Quick takeaways

  • Mild Cognitive Impairment (MCI) can make money tasks harder long before dementia is obvious.
  • Early planning protects your independence and your savings.
  • The right legal tools (especially a well-drafted Durable Power of Attorney) can prevent costly delays and reduce family stress.
  • If you notice changes, act now: talk with your doctor and an elder law attorney.

How memory changes affect money

Many people with MCI can seem “fine,” yet may:
  • Struggle to balance a checkbook or pay bills on time
  • Have trouble understanding investments, bank statements, or why balances change
  • Bounce between topics and lose track of details
  • Feel unsure making financial decisions
  • Find it hard to make change or count cash
  • Be more vulnerable to scams, pushy sales tactics, or manipulation by others
Senior organizing bills and bank statements at home, showing difficulty managing finances due to memory changes.
Financial advisor helping elderly parent and adult child with early financial and power of attorney planning.

Why early planning matters

  • MCI increases the risk of future dementia for some people, but not all. Some improve or stay stable.
  • Because financial capacity can be affected early, planning before a crisis helps you:
    • Choose who helps you if needed
    • Add safeguards against fraud and mistakes
    • Avoid court delays and high costs later (like guardianship)

Immediate steps to safeguard your money

  • Talk with your doctor
    • Request a cognitive screening. Ask about referrals to a specialist if needed.
  • Set up practical protections
    • Add a “trusted contact” to your financial accounts
    • Enroll in account alerts (large withdrawals, new payees, wire transfers)
    • Use automatic payments for regular bills
    • Consolidate to fewer accounts to simplify oversight
    • Consider a credit freeze or fraud alert with credit bureaus
    • Register for the National Do Not Call Registry
  • Reduce scam exposure
    • Let unknown numbers go to voicemail
    • Use call-blocking and spam filters
    • Never share codes or passwords
  • Share a simple plan with family
    • Choose 1–2 trusted people who can help if needed
    • Keep a secure list of accounts, logins, advisors, and bills

Legal tools that protect your choices

Older adult reviewing and signing general power of attorney documents with advisor.

General (Non‑Durable) Power of Attorney

  • What it is: Lets a trusted “agent” handle specific financial tasks while you’re still competent.
  • When it ends: Automatically ends if you become incapacitated or die.
  • Best for: Temporary or limited tasks.
Senior woman reviewing durable power of attorney paperwork with family member.

Durable Power of Attorney (DPOA)

  • What it is: Stays valid even if you later lose capacity.
  • Why it matters: Avoids delays and court involvement if help is needed quickly.
  • Important: It gives broad powers. Choose an agent you trust absolutely.
  • Tip: Add oversight options (see “How to reduce risk” below).
Attorney explaining springing power of attorney details to elderly couple during financial planning meeting.

Springing Power of Attorney

  • What it is: Activates only after a specific event (for example, a doctor certifies you’re incapacitated).
  • Why choose it: Offers more control until help is clearly needed.
  • Consider: It can delay action while waiting for documentation—ask your attorney what’s best.
Doctor discussing medical power of attorney options with elderly patient and family member.

Health Care (Medical) Power of Attorney

  • What it is: Names a trusted person to make medical decisions if you can’t.
  • Why it matters: Often works better than a living will alone, because a real person can respond to changing medical situations.
  • Note: You can revoke it or set limits any time you’re able to communicate.
Family consulting attorney about guardianship or conservatorship for an elderly relative.

Guardianship or Conservatorship (as a last resort)

  • When needed: If someone is no longer competent and no valid Power of Attorney exists, a court may appoint a guardian (personal/medical decisions) or conservator (financial decisions).
  • Downsides: Costly, public, and slower than using a DPOA. Plan early to avoid this if possible.

How to reduce risk when naming an agent

  • Choose carefully: Select a person with integrity, good record-keeping, and the time to help.
  • Add oversight:
    • Name co-agents who must act together
    • Require regular accountings to a third party
    • Give read-only access to a second trusted person
  • Limit powers if needed:
    • Define spending limits
    • Require written approval for large gifts or real estate sales
  • Revisit regularly: Review and update documents as your situation changes.

Special powers that may be needed for eldercare and Medicaid planning

  • Real estate transactions (sell, transfer, or manage property)
  • Gifting authority (within limits) and the ability to create or amend certain trusts
  • Access to digital assets and online financial accounts Important: These powers are not always included in standard templates. Work with an elder law attorney to ensure your POA includes the exact language your state requires.

Spotting financial exploitation

Watch for:
  • Sudden changes in spending, new “friends,” or unexplained withdrawals
  • Bills piling up or utilities being shut off
  • Pressure to sign documents or secrecy about money If you suspect abuse:
  • Contact Adult Protective Services in your state
  • Notify the bank’s fraud department
  • Consider consulting an attorney immediately
What to do now: a simple checklist
  • Within 7 days
    • Schedule a primary care appointment. Ask for a cognitive screening.
    • Turn on bank and credit card alerts.
    • Add a trusted contact to your accounts.
  • Within 30 days
    • Meet with an elder law attorney to draft or update:
      • Durable Power of Attorney (with necessary special powers)
      • Health Care Power of Attorney and, if desired, a living will
    • Organize key documents in a secure folder or digital vault.
    • Discuss roles and expectations with your chosen agent(s).
  • Ongoing
    • Review statements monthly (you or a trusted helper).
    • Reassess your plan every year or after any major health change.

FAQs

What is Mild Cognitive Impairment (MCI)?
MCI is a condition where memory or thinking is weaker than normal for your age, but daily independence is often maintained. Money tasks are often one of the first areas affected.
Can someone with MCI sign legal documents?
Yes—if they understand what the document means and the consequences. This is called “capacity.” An attorney can help assess and document capacity at the time of signing.
Does a Power of Attorney take away my rights?
No. You still make your own decisions as long as you can. A court is the only authority that can remove decision-making rights.
Should I choose a durable or springing POA?
A durable POA allows immediate help and avoids delays. A springing POA offers more control but may slow things down during a crisis. Ask an attorney what fits your situation.
When is guardianship necessary?
When someone cannot manage their affairs, and no valid POA exists—or there’s serious risk of harm or exploitation—court-appointed guardianship or conservatorship may be needed.
How can I protect against scams?
Use call blockers, do-not-call lists, credit freezes, two-factor authentication, and account alerts. Never share codes or passwords. Ask your bank to monitor for unusual activity.
We’re worried about family conflict. What can we do?
Use co-agents, require regular accountings, and consider an independent professional as agent. Facilitate a family meeting with an attorney present.