When a loved one requires financial intervention
Strategies for planning your future with someone who may require financial intervention.
“How to financially plan for a future with someone who may become mentally unstable at any time?”
There are many different ways in which this can become a concern. It could be because a loved one (whether a parent, sibling, or partner) has a mental health disorder or because there’s a family history of dementia or Alzheimer's.
The initial conversation around this topic should happen when there is no moment of crisis and everyone is in an emotional and willing place to engage.
One of the options to consider is a mental health power of attorney. It’s also possible your advanced healthcare directive may also cover mental health, but this can vary by state.
A mental health power of attorney puts the person who could experience a manic episode or a mental health crisis in the driver’s seat. They are able to appoint who they would want to make decisions if they themselves were unable to do so. The document can also detail decisions that they’d want made by the person who has power of attorney (POA), including:
Medication
Hospitalization
Drug trials
Interventions
Temporary custody of dependents
The other consideration is financial and the person who sets up the mental health power of attorney could stipulate when they would want their POA to take over their finances. This could minimize the risk of draining accounts or making large purchases or investments during a manic episode or during the onset of dementia.
A power of attorney needs to be drawn up, signed, and notarized when a person has the capacity to do so, which means not during a manic episode.
Power of attorneys and advanced health care directive are also critical for aging parents, especially if there’s a family history of dementia or Alzheimer's. But frankly, we should all have them because you never known when you may be unable to make your own decisions (coma, stroke, or any health crisis that leaves you incapacitated).
Another reason to initiate conversation about this early is that you never want to be in a situation in which you have to legally prove a loved one is unable to make their own decisions. This essentially requires putting your loved one on trial in order to be granted power of attorney by the courts.
Having the paperwork done in advance means the person is given the dignity of detailing the decisions they’d want made if they’re unable to make healthy decisions for themselves and can determine when the power of attorney should be applicable.
Ultimately, this is a situation in which you want to seek legal counsel from a professional who has experience in this particular area of law. An attorney can best explain the different options and clarify when the designated power of attorney would be able to step in. You can use online templates or free resources as a starting off point for discussion, but need to go to a professional to ensure it would hold up in court. It’s also important to know that a person with POA would likely be able to see medical and mental health records when the power of attorney is in effect. You can learn more about that from the Department of Health and Human Services here.
I address this topic more in depth in Broke Millennial Talks Money, chapter 8: When a loved one requires your help or intervention.