Serving the elderly puts in play a host of ethical dilemmas.

Alice Rhodes, a fee-only planner in Lake Forest Park, Wash., posted the following message earlier this year to the discussion forum sponsored by The National Association of Personal Financial Advisors (NAPFA):

"My 73-year-old client's memory has failed her very suddenly over the past six months. We have a draft will in progress that includes a very important change in her estate planning. She keeps telling me she has [reviewed it] and will mail it back, but it never arrives in spite of my repeated requests. Early in our relationship, I asked her if I should contact her son if this situation should arise, and she affirmed that I should. However, I didn't document her instruction. She's becoming a bit hostile toward me because she feels I am criticizing her. I have offered to stop by and pick up the documents, and she asked me not to come. Last fall, I asked her to visit her doctor and have her memory checked. She did, and the doctor told her she was fine, and therefore she thinks I'm being overly critical. It is amazing how quickly these things can spiral out of control. I would appreciate if others could share what they have done in similar situations."

This scenario is becoming increasingly common in our industry. When they began practicing in the 1980s and 1990s, many planners targeted retirement-age clients. Now those clients are dramatically older, many becoming infirm. Serving as their financial advisor as they pass through these life stages poses new and, in many cases, unanticipated demands upon us.

Andy Claybrook of Fee-Only Financial Solutions in Franklin, Tenn., learned the physiological signs of progressive mental incapacity when his father was diagnosed with Alzheimer's. An associated problem, he found, is that family members of the afflicted are often so close to the individual that they fail to see the very gradual changes taking place. "If someone-financial advisor, clergyman, etc.-notices subtle changes in an elderly individual, I think it's appropriate for that person to inform a family member of what he's observing so appropriate medical evaluations can be made. Often, the family is too close to the individual to see the changes initially, and the individual's personal physician even misses the early signs of cognitive impairment in many cases," says Claybrook. It's not unusual for unobservant family members to write off subtle memory and behavioral changes as normal aging, he adds.

In describing a client's downward spiral, Jeff Daniher of Ritter Daniher Financial Advisory in Cincinnati, Ohio, notes there are other changes advisors should look for. "My client was retired and initially needed help managing his money," he says. "What started throwing me off was he was missing meetings, or he'd be early or late. I was really alarmed when he came back the next day after a meeting and didn't remember he'd seen me the day before. Other signs I saw were repetition and redundancy, and lack of interest. When a client who used to take interest in conversations about finances suddenly stops asking questions, [that's a warning sign]."

Loss of mental capacity can be dealt with using estate-planning strategies we all know we should exercise with older clients. However, we don't always give this work the proper priority. Many advisors relegate estate planning to the lower end of their "to-do" list when, particularly with older clients, that area of planning should come first or-at least-be considered simultaneously with the client's other planning.

Aside from a client's advanced age, Bedda Emous of Fiduciary Solutions in Andover, Mass., notes other reasons why estate planning should be tackled early on: "Many clients take their sweet time when executing estate planning decisions. In fact, the older they get, the more recalcitrant they often become, and therein lies the problem. It is crucial for a planner to firmly move elderly clients to get their legal documents in order before an attorney would have to decline the work because the client isn't mentally competent."

In addition to the usual estate documents, Nancy Nelson takes the step of having her clients execute something called an "Anticipating the Potential for Incapacity" form at the beginning of the planning relationship. Nelson, an advisor in Olympia, Wash., says this form clarifies what her role should be if she notices changes in the client's mental capacity that perhaps have gone unnoticed by others. Using the form the client indicates, among other things, who her advisor should contact on her behalf.

Sometimes a client's incapacity is evident at the start of a planning engagement, before there's time to construct documents. Thomas Carroll of The Alpine Financial Group in Cincinnati, Ohio, says, "We refused to work with a 78-year-old divorced women unless she got her family involved [because her condition was getting] progressively worse. We prepared a letter to send to her three children, which we discovered she never mailed. She would not let us talk with them, her lawyer or accountant." With the help of a personal friend of this client, she was coaxed into meeting with her estate attorney, her children and Carroll to have a trust and will drawn up. She also sold her home and moved into assisted living facility.

How good were Carroll's instincts? Very good. "She was diagnosed with Alzheimer's six months later and died in nine months," he says. "All of her assets had been put into the new trust, so probate was minimal. Her family was very appreciative of what I'd done."

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