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Executive Summary

Dealing with dementia with financial services and investment clients will become increasingly complicated over time. The number of people who are aging, the ever-extending length of their lives, and the activity that they display well into retirement, coupled with the complexity of capital markets and products can produce a difficult situation for many.

The boundaries of the Boomer generation has them aged from 55 to 75 in 2024. Advances in all types of medical diagnostic and treatment regimens has increased the life expectancy well into the 80s for both men and women in Canada and the United States.

The legislation and regulation regarding clients with dementia will continue to evolve, but it squarely falls under the Know Your Client area. As you suggest or receive investment recommendations and choices to or from your clients, you must feel confident that they are capable of making decisions on their behalf.

And as much as Advisors may feel that Compliance can make their lives miserable at times, this is one situation where involving Compliance will be the smartest decision to make. It is paramount that you maintain your clients’ interests above all else and if you embark on this journey too quickly, without guidance, and, frankly, as the friend and trusted advisor who is now discussing potentially personal and emotional issues, the relationship could be irreparably damaged.

Involve a third-party like Compliance, branch or regional management to assist with each case.

If one of your clients displays the following characteristics, it may be time to act.

1. Rapidly forgetting items and details, and the inability to retain new information
2. Difficulty performing familiar tasks
3. Forgetting words or using words out of context
4. Disorientation in time and space by not knowing the day or a familiar place
5. Impaired judgment with the inability to analyze and act on a situation
6. Problems with abstract thinking like telling time or performing mathematics
7. Misplacing items or putting them in unlikely places
8. Severe mood swings from easy-going to anger
9. Changes in personality
10. Loss of initiative and interest in friends, family and favourite activities

If you see several of these activities and conditions in a client, especially when they haven’t been previously present, it is time to act.

Each situation is different since each of us are individuals. But several steps are common to every situation:

• Review the Power of Attorney documentation on file
• If family members are involved, encourage your client to include them in your next meeting or conversation
• Discuss your concerns with your branch or regional management to receive the latest direction from your firm’s legal and compliance departments

The sources of dementia are many; they range from strokes, sleep disorders, nutritional deficiencies, thyroid conditions, Parkinson’s disease, Huntington disease, mental illness and the most discussed cause, Alzheimer’s Disease.

The source of the dementia will determine the appropriate course of treatment, naturally. In nearly every case, as a percentage of the total, the reversal of symptoms is almost always impossible to achieve.

Canada, along with the rest of the G7 countries, has some of the best dementia diagnostic and treatment in the world. As developed nations the life expectancy is consistent, and the incidence of dementia is similar across the seven countries. In 2023 the number of cases is estimated at nearly 14 million, or 30% of all dementia cases worldwide.

Each province and territory has a well-developed system of provincial, regional, and local dementia and Alzheimer’s societies. Each provide educational and support resources for individuals and families.

If your practice is skewing toward older clients, and this is an area of interest to you, volunteer opportunities are plentiful on the fundraising and care dimensions. Special areas have been established in many care facilities where well-mannered and tempered dogs are brought in to provide later stage dementia patients with comfort, for example.

Key Factors to Know

Dementia, whether it is Alzheimer’s or another source, will touch almost every family. Globally almost 50 million people have been diagnosed, with a new case identified every 3 seconds according to the Alzheimer’s Society in the United Kingdom.

The cost of dementia globally is estimated at $818 billion USD for 2015. A significant amount of healthcare resources are being poured into this area since it has a debilitating effect on those directly and indirectly afflicted.

Memory loss and diminished mental abilities, like reduced joint flexibility and endurance, are a normal part of aging. According to the Alzheimer’s Society of Ontario the symptoms typically follow a pattern of increased frequency of forgetfulness, and the forgetfulness of increasingly important and personal details of one’s life.

The Bottom Line

Stay attuned to your client’s personal situation and stay in-contact closely enough to understand if any physical or mental abilities are being impaired.

The best pre-emptive steps are to include multiple generations in your client base and include multiple generations in your discussions for family financial planning. Obtain consent to discuss your client’s situation with their adult children.

And don’t assume that the older generation, who may be losing some mental acuity, and may be experiencing dementia, does not realize this and want assistance.

While uncomfortable to think about, effectively planning ahead for when you are no longer here can save your loved ones a great deal of time, money, and emotional hardship.  Estate planning can be complicated, but there are some basic “must-do’s” that should be regularly updated and reviewed. Below is a simple checklist for making sure your estate plan is up to date.

What You Need to Know

Wills

• Have you created a will?
• Is it updated and current?
• Have you experienced any major life changes since the will was created? This could be a new marriage, divorce, child, death in the family, etc.

Wills should be created with the guidance of an estate lawyer to ensure that your final wishes are correctly documented and carried out. It is vital that a will be regularly updated as it acts as the foundation of your estate plan.

Beneficiaries

• Do all your registered investments have a named beneficiary? This includes RRSP, RDSP, RESP, TFSA, Pension Plans, and Segregated Funds.
• Do all your life insurance policies have a named beneficiary?
• Have you recently reviewed your beneficiaries? Has there been a major life changes such as a marriage or divorce that could warrant a change to your beneficiary appointment?

Beneficiary designations allow for assets to bypass probate (in most cases) and be passed directly to your beneficiary. This is a great money and time saver.

Dependents

• Do you have a family member that you wish to provide an income to after your death?
• Do you have family members that you wish to fund an education for after your death?
• Do you have any family members that have special psychological or physical needs that you would like to provide financial support for?
• Do you have a parent or other relative that you wish to ensure is taken care of financially if you die prematurely?

There are a variety of different financial and legal tools available to Canadians that can help them provide income or support for their dependents when they are gone. Keeping your dependents updated in your will is important as they may change throughout your lifetime.

Executors

• Have you named an Executor of your will?
• Is the Executor up to date? Have you named an alternate Executor in the event your first choice is unable to fulfill the position?
• Has your Executor been made aware of their appointment and been briefed on your final wishes?

An Executor is someone you appoint in your will that will be responsible for administering your estate. An Executor should be someone you trust and also someone who is capable of dealing with the potentially complex responsibilities involved with administering an estate.

Powers of Attorney

• Have you appointed a Power of Attorney for Property? This person will be able to help you with your finances and personal property in the event you are unable to do so yourself.
• Have you appointed a Power of Attorney for Personal Care (Health)?  This person will be responsible for making medical and personal care decisions for you if you become unable to act on your own.
• Are you POA’s aware of their appointment and willing/capable to perform the tasks that will be required of them?

Power of Attorney is a legal document that allows you to appoint someone to help you with your finances and personal care in the event that you feel unable to do so or become mentally incapable.

Financial Planning

• Have you spoken to your financial advisor about structuring your assets in the most tax efficient way to minimize estate taxes and probate fees?
• Have you set aside enough money to cover final expenses, estate taxes, probate fees, and funeral arrangements?
• If you own a business, have you worked with your professional team of advisors to develop a succession plan?
• Have you recently taken the time to calculate your final expenses and potential estate taxes?
• Have you addressed any permanent insurance needs you may have?
• Have you spoken to your advisor about your wishes to make a charitable donation before/after your death?

Your financial advisor will play a significant role in helping you prepare your estate. The above questions are only some of the issues that you may want to bring up to your financial advisor so that they can help you make your estate as efficient as possible.

Your Personal Financial Inventory

Prepare an Inventory of Assets and Liabilities

• Real Estate
• Investments
• Bank Accounts
• Annuities/Life Insurance
• Personal Property (Art, Jewelry etc.)
• Pensions
• Value of Any Businesses You Own and Their Structure
• Digital Assets

Make Sure You Indicate the Location of the Following

• Will and Power of Attorney
• Birth and Marriage Certificates
• Divorce/Separation Agreements
• Insurance Policies
• Deeds
• Safety Deposit Box
• Preplanned Funeral Arrangements
• Trust Documents
• Names and Contact of Personal Advisors (lawyers, accountants, financial planners)
• Executors, liquidators, and trustees

Far too often family members are left scrambling to find important documents and information. Your financial advisor and lawyer can help you collect the above information and organize it for your beneficiaries and executors.

The Bottom Line

Estate planning has a reputation for being complicated, but for most people all it takes is some thoughtful pre-planning. Working with a lawyer and financial professional will ensure all of your bases are covered and your final wishes are carried out. Estate plans should be reviewed and updated regularly.

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Many people may worry as they get older about what will happen if they are no longer able to manage their finances and personal property. It can be a good idea to be proactive in planning ahead for a time when you may need help managing your affairs. One option available to Canadians to address this financial planning concern is appointing a Power of Attorney.

What You Need to Know

What Is a Power of Attorney?

Power of Attorney (POA) is a legal document that gives one or more persons the authority to manage your finances on your behalf. Once a person is appointed POA, they have the same decision-making abilities over your finances and property as you do. This includes bank accounts, investments, bills, real estate etc.  It’s important to understand that this does not mean they now own the property, only that they can make decisions regarding it. POA is limited, however, and they do not have the authority to make or change your will, change beneficiaries, or appoint a new POA. You have the ability to outline how the power of attorney can act. For example; you can limit them to having decision making abilities over only one piece of property.

It is possible to appoint more than one person as power of attorney. The acting POA’s can be required to make decisions together, or have the ability to act separately. This is something that is outlined in the power of attorney document. Unless you become mentally incapable you still maintain the same control over your finances and property.

Types of Power of Attorney?

There are two types of power of attorney when dealing with finances and property:

1. General Power of Attorney – General POA gives someone the authority to make decisions over some or all of your property on your behalf. General POA only has this authority when you are mentally capable of managing your own affairs. POA ends immediately if you become incapable. Power of Attorney can come into effect when you assign them or on a specified date.
2. Enduring/Continuing Power of Attorney – Enduring POA allows for the appointed attorney to have decision making power over your property when you are mentally incapable.

Choosing an Attorney

The person you assign as power of attorney should be someone you trust completely. This person could be a spouse, sibling, child, or other friend/relative. The minimum legal age for a POA varies from province to province. It is recommended to assign a substitute POA in the event your first choice is unable or unwilling to assume the role. It is important to note that in some provinces, POA’s are entitled to be paid unless otherwise specified in the document. Power of Attorneys must be able to manage your money in your best interest and keep detailed records on the decisions they make on your behalf.  Below are a few questions to ask yourself about the person you are considering appointing:

• Does this individual have experience managing money and property? Do they do a good job of managing their own affairs?
• Do you know this person well enough to feel that you can trust them?
• Do they have any personal issues that may interfere with their ability to act in your best interest?
• Does the individual understand what will be expected of them as your attorney?
• Does this person have the time to manage your money or property as well as their own?
• Is this person nearby and readily available to assume this role? Having someone that lives far away from you may cause issues.
• Has this person willingly accepted their appointment as attorney?

Benefits and Risks

Benefits:

• Makes it clear to family and friends who will be responsible for your money.
• POA’s must manage your money for your benefit and can be required to account how he/she manages it.
• Your Power of Attorney document can be as general or specific as you want giving you great flexibility over what assets your attorney would have control of.
• The ability to have multiple attorneys can limit the possibility of someone taking advantage of you.

Risks:

• Can lead to mismanagement of your money if your POA turns out to be untrustworthy.
• Sometimes people limit the abilities of the POA to the point that it makes it difficult for the POA to fully take care of your finances.
• Appointing two or more POA’s can come with certain challenges. If the POA’s are required to act jointly then it is possible that they will not agree on certain decisions.
• If your Power of Attorney is not up to date, it is possible that the person you appointed may be currently unsuitable for the role.

The Bottom Line

Appointing a Power of Attorney can be a good option for many people and gives them the peace of mind that someone will be able to help them with their money if there is ever a need for it. When appointing a Power of Attorney, it is important to work with a lawyer who can fully explain the legal document to both you and your attorney. You should never feel pressured by a relative or friend to sign a Power of Attorney.

It is also important to note that a Power of Attorney for Property is not the same document as a Power of Attorney for Personal Care. A POA for property will have no authority to make decisions regarding your personal care.  These are two separate legal appointments and they are not interchangeable.

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