I get the question all the time, “Moms gotten loopy what do we do?”

Unfortunately, as an Elder Lawyer, I have to admit there are no silver bullets and these are difficult situations.  So lets talk about the situation and what can be done.

Diminished Financial Capacity In Seniors

When a senior starts to lose their mental facilities, their financial skills and ability to drive are often the first to go.  Their skills peak in their 50s and then go downhill.

Diminished Financial Capacity

They are normally in charge of their own finances paying their bills and investing their money without any oversight.

Sometimes the decline can be fast or it can be slow.  However, her doctor and other healthcare professionals have a series of tests they can use to determine the decline.  Often Mom’s tax preparer will be the first to know of the decline.

The mental decline means they can’t pay their bills or invest their money.  They are easy prey for scammers, unscrupulous help, helpful neighbors and even potential brides or roommates.  They make bad financial decisions.  They take out reverse mortgages, buy indexed annuities and invest in bonds with Nigerian scammers.  Unfortunately, senior related services and benefits like Medicare, Medicaid, social security, hospitals, independent living, and insurance are very complicated and often need to be dealt with just when the senior is least likely to be able to handle the complexity.

There are few protections built into the system so you and they are on your own.

What Can the Senior or Child Do?

As a child, how and when to step is a difficult decision.  It is very difficult to both understand the timing and to handle the parent. Finding a tactful, loving way to do this is not always possible. Often the parent is fiercely independent and resists any attempt at control by a child.

If you can, here is what to do.

First, simplify things so they are easy to track, control and understand.  One bank account and one custodial account.

Second, advance planning is better than crisis reaction every time.

Third, you can take control of Mom’s finances with access to her accounts online and a Power of Attorney.  You can pay her bills and monitor all of her accounts and credit card bills.  You can freeze her credit accounts to avoid opening new ones.  You can get duplicate statements (most of this can be done online now) and notices if a bill isn’t paid.  However, whoever has this access and power, can easily abuse it so trust and verify and use multiple parties.

Fourth, moving the assets into a trust can work to provide simple and easy financial handling and succession.  In many instances, it can also help with Medicaid and estate planning.  In this case, the child would apply to the Court to be appointed as Conservator and have the formal power to make decisions for Mom.

NY and CT have different proceedings for Conservatorships so if you live in Wilton there is a different procedure than if you live in Pound Ridge.

Advance Planning

In advance planning, the concept is to convince mom and dad of planning for incapacity well BEFORE capacity becomes an issue.  Hopefully, mom and dad come up with the idea themselves, or accept advice from their planner, and agree to the triggers that allow supervisory control well in advance.

In advance planning, the planner will ask for multiple people who are willing to step in and assist if and when the need arises.   Multiple parties are necessary for checks and balances because relatives and professionals can abuse their power, maybe even more easily than the Nigerian scammers.

In addition, the planner should ask for “a letter of diminishing capacity,” which authorizes the adviser to raise the issue with a trusted individual the client names if he


Once fraud occurs and the money is gone, chances of getting it back are very low.  If it is an outright fraud it should be reported to the local police and federal authorities.

Seniors Without Children

And then there are the increasing number of seniors who do not have any children.  Others do not trust their children, or feel that their children are not competent to handle their finances.

If the person does not have trusted family members or friends they are left to the mercy of public agencies, paid fiduciaries and the courts.

Consider Annuities

With the decline of the traditional pension and the rise of the 401K and other  similar plans, seniors find themselves with a lot of money and need to continually invest it and make decisions about money until the end.  One option is annuitize a portion of the funds to provide a smooth and steady cash flow and eliminate the need to make financial decisions.   Single premium annuities can be purchased directly and at a low cost, shifting the investment and mortality risk to the insurance company.

Standard for Capacity in Connecticut and New York

In Connecticut the standard for capacity is the person must have the mental capacity sufficient to comprehend the nature, extent and consequence of their actions.

In New York, a Guardian will be appointed if the person is unable to provide for their personal needs or is unable to manage property and financial affairs; and the person cannot adequately understand and appreciate the nature and consequences of such inability.