Dementia and unexpected financial risks

Here we take a look at the challenges of helping someone manage their financial affairs and retain their independence.


Dementia and unexpected financial risks. There are more than 850,000 living with dementia in the UK and that total is projected to rise to more than one million by 2025. For families caring for a loved one with a dementia diagnosis it can be an extremely challenging experience trying to balance the need to remain independent with a duty to safeguard against their vulnerability.

Alzheimer’s UK reports that 15% of people with dementia have suffered some form of financial abuse. If you are caring for a loved one with a dementia diagnosis, remember people with the condition need time to process thoughts and actions. Keep remembering that their brain is working more slowly than yours and try not to be hurt if they fail to remember your name or accuse you of misplacing their belongings.

“If a family member is diagnosed with dementia, often the most obvious financial concern you’ll have is over how much care they’ll need, and what it will cost,” explains Sarah Coles, a personal finance analyst at Hargreaves Lansdowne. “However, dementia can throw up all sorts of far less well-known financial problems, from sufferers believing someone is stealing from them, to repeatedly paying the same bills, and even financial abuse. We need to understand the risks to prevent our loved ones falling foul of them.

“In many cases, protecting someone with dementia is far easier if they have drawn up a Lasting Power of Attorney. This allows them to name an individual they trust to step in to make decisions for them when they can’t do it anymore. There are two kinds: financial and health, and it’s worth them having both. It means that when they reach the stage of not being able to deal with their own finances, someone they trust is ready to step in and help.

“They need to have clarity of thought to set this up, so if you wait until their dementia has progressed, and they have lost what’s known as ‘mental capacity’, it’s too late. You can still make decisions for your loved one, but you’ll need to apply for deputyship which takes longer, costs more, and will limit how much you can do for them.”

Stealing accusations

It’s easy for sufferers to forget where they left their wallet, forget they have spent money, and worry they’ve lost it or it has been stolen from them. If families aren’t aware of this, it can lead to distrust and disagreements.

The best protection is to be aware of this, and why it happens, but you can take steps to minimise the risk too.  If you have an Lasting Power of Attorney (LPA), you can withdraw the same amount of money each week and they can take a small sum out with them each day. It’s worth them keeping a cash book, where they note what they spend. That will make it easier to keep track of where their money has gone. At home, they should have a ‘safe place’ where their wallet is kept, where they can easily see it, so they can reassure themselves regularly that nothing has been stolen.

Paying bills multiple times – or not at all

It can be difficult to remember which bills have been paid, so they may pay more than once or miss payments altogether. It can make life much easier if you can help them sort out direct debits and automate payments for their bills. Again, it helps to have an LPA – although you can still do this alongside them.

Buying things they don’t need

They might take a fancy to something unexpected, or repeatedly buy the same things, so it’s a good idea to monitor their account for spending. If you don’t have an LPA ask them to set up a third-party mandate, which means you can keep an eye on their accounts. Some businesses let you link accounts – which has a very similar effect. If you suspect this is going to be a problem, if you have an LPA, you can cancel their debt facilities too, so if they do overspend, there’s a limit as to how much damage they can do.

Telling people their PIN

A sufferer may not want to admit they cannot remember their PIN. If they have trouble remembering it, they may ask someone to write it down for them, and may end up sharing it either deliberately or accidentally. Talk to your bank and arrange for them to have a card that lets them spend with their signature

Dementia sufferers fall victim to scams

Sufferers find it difficult to know who to trust, so they can fall victim to scammers. You can make it harder for scammers to reach them, with a call blocker for their phone, and by signing up to the telephone preference service and the mailing preference service, to cut down junk mail and nuisance calls. But you won’t be able to keep everyone out, so if you have an LPA, keep an eye on their account, and check their post when you visit. You’re looking for unopened bills that they can’t afford, or an increase in scam letters or junk mail – which can indicate they have responded to a scammer.

Nullifying their Will

Sometimes people with dementia can decide to get married, and while this may be the celebration of a long-term relationship, in some cases they may have difficulties understanding relationships and propose to other people in their lives. The cognitive function required for marriage is lower than that required in order to draw up a Will. It means getting married may nullify any Will, and because they can’t draw up another, it means they will die intestate and their new spouse will inherit the first chunk of the estate. If they have the cognitive function to marry, you will need to respect their wishes. However, if you are worried that they don’t, you should talk to their GP as a first step.

Being a victim of financial abuse

All of these things means someone who is close to the sufferer may be able to take advantage of them, and an estimated 15% of people with dementia have been victims of financial abuse. You can protect them against this with an LPA and keeping a close eye on their finances. You will also be alerted to problems if they start showing fear or anxiety when it comes to money.

For more content this visit our dementia hub.

Last modified: May 23, 2021

Written by 1:16 pm News & Views