Impact of Dementia on Capacity to Manage Finances and Prevention of Financial Exploitation Daniel Marson, J.D., Ph.D. Professor of Neurology Director,

Impact of Dementia on Impact of Dementia on Capacity to Manage Finances and Capacity to Manage Finances and

Prevention of Financial ExploitationPrevention of Financial Exploitation

Daniel Marson, J.D., Ph.D.Daniel Marson, J.D., Ph.D.Professor of NeurologyProfessor of Neurology

Director, Alzheimer’s Disease CenterDirector, Alzheimer’s Disease Center

Department of NeurologyDepartment of Neurology

University of Alabama at BirminghamUniversity of Alabama at Birmingham

[email protected]@uab.edu

The Aging Population, Alzheimer’s and Other Dementias:The Aging Population, Alzheimer’s and Other Dementias:

Law and Public PolicyLaw and Public PolicyNational Health Law and Policy Resource CenterNational Health Law and Policy Resource Center

University of Iowa, Iowa City, IowaUniversity of Iowa, Iowa City, Iowa

March 1, 2012March 1, 2012

DisclosureDisclosure Financial Capacity Instrument (FCI)Financial Capacity Instrument (FCI)

Semi-Structured Clinical Interview for Financial Semi-Structured Clinical Interview for Financial

Capacity (SCIFC)Capacity (SCIFC)

Owned by UAB Research FoundationOwned by UAB Research Foundation

Inventor Dr. MarsonInventor Dr. Marson

No royalty incomeNo royalty income

No relationships with pharmaceutical companiesNo relationships with pharmaceutical companies

Outline 1: Outline 1: Dementia and Financial CapacityDementia and Financial Capacity

Capacity Assessment in an Aging SocietyCapacity Assessment in an Aging Society

Dementia and Functional Change Dementia and Functional Change

What is Financial Capacity?What is Financial Capacity?

Warning Signs of Diminished Financial CapacityWarning Signs of Diminished Financial Capacity

Research on Financial Capacity in MCI and ADResearch on Financial Capacity in MCI and AD

Financial Capacity and the Alzheimer BrainFinancial Capacity and the Alzheimer Brain

Outline 2: Outline 2: Prevention of Financial ExploitationPrevention of Financial Exploitation

The $18.1 Trillion Problem The $18.1 Trillion Problem

Contractual/Transactional Approaches to PreventionContractual/Transactional Approaches to Prevention

Familial Approaches to PreventionFamilial Approaches to Prevention

Legislative Approaches to PreventionLegislative Approaches to Prevention

Capacity AssessmentCapacity Assessmentin an Aging Societyin an Aging Society

Definitions—Oxford Universal Dictionary

CapacityCapacity ~1480 ~1480 [selected definitions][selected definitions]

Mental receiving power; ability to take in impressions, ideas, Mental receiving power; ability to take in impressions, ideas, knowledge. 1485 knowledge. 1485

Active power of mind, talent. 1485 Active power of mind, talent. 1485 The power, ability, or faculty for anything in particular. 1647The power, ability, or faculty for anything in particular. 1647 Law. Legal qualification. 1480 Law. Legal qualification. 1480

Definitions—Oxford Universal Dictionary

CompetentCompetent ~1483 ~1483 [selected definitions][selected definitions]

Law. Legally qualified or sufficient. 1483Law. Legally qualified or sufficient. 1483

CompetenceCompetence ~1594 ~1594 [selected definitions][selected definitions]

Sufficiency of qualification, capacity. 1700Sufficiency of qualification, capacity. 1700 Especially law—legal capacity. 1708Especially law—legal capacity. 1708

“As our society ages, clinical assessment of higher order As our society ages, clinical assessment of higher order functional capacities has become increasingly important. functional capacities has become increasingly important.

In areas like financial capacity, medical decision making In areas like financial capacity, medical decision making capacity, medication compliance, and driving, society has capacity, medication compliance, and driving, society has a strong interest in accurately discriminating intact from a strong interest in accurately discriminating intact from impaired functioning.” impaired functioning.”

Marson et al. (2000) Marson et al. (2000) Archives of Neurology, Archives of Neurology, 57: 877-84457: 877-844

Capacity Assessment and AgingCapacity Assessment and Aging

Unprecedented aging societyUnprecedented aging society

Older population vulnerable to cognitive disorders affecting Older population vulnerable to cognitive disorders affecting

decision-making abilitydecision-making ability

Persons with diminished capacity vulnerable to poor Persons with diminished capacity vulnerable to poor

decision-making and exploitationdecision-making and exploitation

Capacity Assessment and AgingCapacity Assessment and Aging Individualistic societyIndividualistic society

Intergenerational transfer of wealth--$16B - $18BIntergenerational transfer of wealth--$16B - $18B

Breakdown of traditional family structureBreakdown of traditional family structure

Family disputes over care of elderlyFamily disputes over care of elderly control of health care & financial decisionscontrol of health care & financial decisions use of estate and inheritance use of estate and inheritance

Civil Capacities/Competencies

Financial capacity: Financial capacity: manage financial affairs manage financial affairs

Treatment consent capacity: Treatment consent capacity: make medical decisionsmake medical decisions

Research consent capacity: Research consent capacity: research participationresearch participation

Testamentary capacity: Testamentary capacity: make a will make a will

Driving capacity: Driving capacity: operate a motor vehicleoperate a motor vehicle

Voting capacity: Voting capacity: capacity to cast a ballot in electioncapacity to cast a ballot in election

Capacity to live independently: Capacity to live independently: global global

Multiple Professions Must Deal With Multiple Professions Must Deal With Older Adult Capacity IssuesOlder Adult Capacity Issues

Clinicians: Clinicians: can patient consent to treatment?can patient consent to treatment?

Researchers: Researchers: can subject participate in research?can subject participate in research?

Attorneys: Attorneys: can client enter into a contract? make a will? can client enter into a contract? make a will?

Accountants: Accountants: can client contract for services? understand tax return?can client contract for services? understand tax return?

Real estate: Real estate: can client enter into listing agreement?can client enter into listing agreement? c contract of sale?ontract of sale?

Brokers: Brokers: can client enter into financial service contract?can client enter into financial service contract?

understand different forms of risk/return? enter understand different forms of risk/return? enter

into simple into simple or complex investment vehicles?or complex investment vehicles?

Adult protective: Adult protective: can client manage finances and own affairs? can client manage finances and own affairs?

does client need protection?does client need protection?

Dementia Dementia and and

Functional Change Functional Change

Pathological Time-line for ADPathological Time-line for AD

Cognitive Signs of Emerging DementiaCognitive Signs of Emerging Dementia

Short term memory lossShort term memory loss

DisorientationDisorientation

Communication problemsCommunication problems

Comprehension problemsComprehension problems

Lack of mental flexibility, inability to planLack of mental flexibility, inability to plan

Calculation problemsCalculation problemsAssessment of Older Adults with Diminished Capacity: A Handbook for Lawyers, p. 14-15

CLOX 1: Normal Older Control

CLOX 1: Mild Cognitive Impairment

CLOX 1: Mild Alzheimer’s Disease

Emotional/Behavioral Signs Emotional/Behavioral Signs of Diminished Capacityof Diminished Capacity

Significant emotional distressSignificant emotional distress

Emotional labilityEmotional lability

Social inappropriatenessSocial inappropriateness

DelusionsDelusions

HallucinationsHallucinations

Poor grooming/hygienePoor grooming/hygiene

Assessment of Older Adults with Diminished Capacity: A Handbook for Lawyers, pp. 15-16

Instrumental Activities of Daily LivingInstrumental Activities of Daily Living Instrumental activities of daily living are more complex Instrumental activities of daily living are more complex

activities that are not essential to self-care, but that enable the activities that are not essential to self-care, but that enable the individual individual to live independently within a communityto live independently within a community

Light housework Light housework

Preparing meals and cleanupPreparing meals and cleanup

Shopping for groceries or clothes Shopping for groceries or clothes

Using the telephone Using the telephone

Using transportation (community mobility)Using transportation (community mobility)

Taking medications Taking medications

Health management and maintenance Health management and maintenance

Managing moneyManaging money

Activities of Daily LivingActivities of Daily Living Activities of daily living (ADLs) are "the things we normally do in daily living Activities of daily living (ADLs) are "the things we normally do in daily living

including any daily activity we perform for including any daily activity we perform for self-careself-care (such as feeding (such as feeding

ourselves, bathing, dressing, grooming), work, homemaking, and leisure."ourselves, bathing, dressing, grooming), work, homemaking, and leisure." ~MedicineNet.com Medical Dictionary~MedicineNet.com Medical Dictionary

Bathing Bathing

GroomingGrooming

Dressing and undressing Dressing and undressing

Eating Eating

Transferring from bed to chair, and back Transferring from bed to chair, and back

Voluntarily control of urinary and fecal discharge Voluntarily control of urinary and fecal discharge

Using the toilet Using the toilet

Walking (not bedridden)Walking (not bedridden)

IADLs As Early Functional MarkersIADLs As Early Functional Markers in Dementia Research in Dementia Research

IADLs are cognitively complex activities vulnerable to IADLs are cognitively complex activities vulnerable to

cognitive aging, MCI, and dementiacognitive aging, MCI, and dementia

IADLs like financial capacity show significant impairment IADLs like financial capacity show significant impairment

in MCI and the very earliest stages of ADin MCI and the very earliest stages of AD

Are diagnostically important markers for research on Are diagnostically important markers for research on

progression in MCIprogression in MCI and and conversion to dementiaconversion to dementia

Functional Change in DementiaFunctional Change in Dementia

Mrs. Ethel C 69 year old white femaleMrs. Ethel C 69 year old white female

MMSE = 22/30 DRS = 120/144 Diagnosis = mild ADMMSE = 22/30 DRS = 120/144 Diagnosis = mild AD PremorbidPremorbid: : “Ethel handled the family bank account for most of “Ethel handled the family bank account for most of

our married life with little help from me--and balanced the our married life with little help from me--and balanced the

checkbook.”checkbook.”

CurrentCurrent: : “Approximately 2 years back she could no longer “Approximately 2 years back she could no longer

handle the family bank account--this happened very quickly--she handle the family bank account--this happened very quickly--she

failed to make deposits and enter the checks she had written—failed to make deposits and enter the checks she had written—

she now has no worry about finances.” she now has no worry about finances.”

Financial CapacityFinancial Capacity

““everyday use of money will be highly everyday use of money will be highly correlated with general success in correlated with general success in independent living” independent living”

Melton et al. (1987) Melton et al. (1987) Psychological Evaluations for the Courts, Psychological Evaluations for the Courts, p. 249p. 249

An Important ConstructAn Important Construct

economic: economic: maintaining household and financial independencemaintaining household and financial independence

psychologicalpsychological critical to self-perception of independencecritical to self-perception of independence

clinical:clinical: marker of MCI and early dementia?marker of MCI and early dementia?

legal:legal: financial competency and conservatorship financial competency and conservatorship

elder abuse/undue influenceelder abuse/undue influence

Defining Financial Capacity:Defining Financial Capacity:Two Key PerspectivesTwo Key Perspectives

Performance Perspective:Performance Perspective:

FC as the ability to carry out financial activitiesFC as the ability to carry out financial activities

Handle money, understand concepts, pay bills, etc. Handle money, understand concepts, pay bills, etc.

Emphasizes role of Emphasizes role of performanceperformance..

Best Interest Perspective:Best Interest Perspective:

FC as ability to identify and protect financial self-interest FC as ability to identify and protect financial self-interest

Emphasizes role of Emphasizes role of judgmentjudgment..

““the capacity to manage money and the capacity to manage money and financial assets in ways that meet a financial assets in ways that meet a person’s needs and which are consistent person’s needs and which are consistent with his/her values and self-interest”with his/her values and self-interest”

D. Marson October, 2007D. Marson October, 2007

Conceptual Model of Conceptual Model of Financial CapacityFinancial Capacity

Conceptual Model of FCConceptual Model of FC

Clinically informedClinically informed

Focus on functional abilities relevant to FCFocus on functional abilities relevant to FC

Three levels:Three levels:

TasksTasks——specific financial abilitiesspecific financial abilities

DomainsDomains——broad financial activities that each have clinical broad financial activities that each have clinical

relevance to independence (eg., managing checkbook)relevance to independence (eg., managing checkbook)

GlobalGlobal——overall financial capacityoverall financial capacity

Financial Tasks Financial Tasks

Naming coins/currency Naming coins/currency Coin/currency relationshipsCoin/currency relationships Count coins/currency Count coins/currency Understanding conceptsUnderstanding concepts Applying conceptsApplying concepts Conduct cash transactionsConduct cash transactions Making change for vendingMaking change for vending Tipping in a restaurantTipping in a restaurant

Understanding checkbookUnderstanding checkbook Using checkbook/registerUsing checkbook/register Understanding bank statementUnderstanding bank statement Using a bank statementUsing a bank statement Awareness of mail fraudAwareness of mail fraud Awareness of telephone fraudAwareness of telephone fraud Prioritizing billsPrioritizing bills Preparing bills for mailingPreparing bills for mailing Making investment decisionMaking investment decision

Financial DomainsFinancial Domains Domain 1 Basic Monetary SkillsDomain 1 Basic Monetary Skills

Domain 2 Financial Conceptual KnowledgeDomain 2 Financial Conceptual Knowledge

Domain 3 Cash TransactionsDomain 3 Cash Transactions

Domain 4 Checkbook ManagementDomain 4 Checkbook Management

Domain 5 Bank Statement ManagementDomain 5 Bank Statement Management

Domain 6 Financial JudgmentDomain 6 Financial Judgment

Domain 7 Bill PaymentDomain 7 Bill Payment

Domain 8 Knowledge of Personal Assets/EstateDomain 8 Knowledge of Personal Assets/Estate

Domain 9 Investment Decision MakingDomain 9 Investment Decision Making

Tasks by DomainTasks by Domain

Domain 1 Basic Monetary SkillsDomain 1 Basic Monetary Skills Task 1a Naming coins/currency Task 1a Naming coins/currency SimpleSimple Task 1b Coins/currency relationshipsTask 1b Coins/currency relationships ComplexComplex Task 1c Counting coins/currency Task 1c Counting coins/currency SimpleSimple

Domain 2 Financial Conceptual KnowledgeDomain 2 Financial Conceptual Knowledge Task 2a Define financial conceptsTask 2a Define financial concepts ComplexComplex Task 2b Apply financial conceptsTask 2b Apply financial concepts ComplexComplex


Domain 3 Cash TransactionsDomain 3 Cash Transactions Task 3a 1 item grocery purchase Task 3a 1 item grocery purchase SimpleSimple Task 3b 3 item grocery purchase Task 3b 3 item grocery purchase Simple Simple Task 3c Change/vending machine Task 3c Change/vending machine ComplexComplex

Task 3d Tipping Task 3d Tipping ComplexComplex

Domain 4 Checkbook ManagementDomain 4 Checkbook Management Task 4a Understand checkbook/registerTask 4a Understand checkbook/register ComplexComplex

Task 4b Use checkbook/register Task 4b Use checkbook/register ComplexComplex


Domain 5 Bank Statement ManagementDomain 5 Bank Statement Management Task 5a Understand bank statement Task 5a Understand bank statement ComplexComplex

Task 5b Use bank statementTask 5b Use bank statement ComplexComplex

Domain 6 Financial JudgmentDomain 6 Financial Judgment Task 6a Detect mail fraud riskTask 6a Detect mail fraud risk SimpleSimple

Task 6c Identify telephone fraudTask 6c Identify telephone fraud Simple Simple


Domain 7 Bill PaymentDomain 7 Bill Payment Task 7a Understand billsTask 7a Understand bills SimpleSimple

Task 7b Prioritize billsTask 7b Prioritize bills SimpleSimple

Task 7c Prepare bills for mailingTask 7c Prepare bills for mailing ComplexComplex


Domain 9 Investment Decision MakingDomain 9 Investment Decision Making

Warning Signs of Diminished Warning Signs of Diminished Financial CapacityFinancial Capacity

Slide provided by Dr. Marson, JD, PhD and UAB

Martin et al. (2003). Loss of calculation abilities in mild and moderate AD. Archives of Neurology. 60: 1585-1589.

Responding to Responding to Warning Signs of Diminished Warning Signs of Diminished

Financial CapacityFinancial Capacity

Financial Capacity in MCI and AD:Financial Capacity in MCI and AD:

Clinical Interview Assessment Clinical Interview Assessment

Clinical Interview AssessmentClinical Interview Assessment

Potentially very useful approachPotentially very useful approach

Combine clinical interview + direct testing of skillsCombine clinical interview + direct testing of skills

Interview both patient and caregiverInterview both patient and caregiver

Allows for clinical judgmentAllows for clinical judgment

Categorical judgments: Categorical judgments: capable marginally capable incapablecapable marginally capable incapable

Disadvantages:Disadvantages: Requires trained clinicianRequires trained clinician

Time intensive for the clinician (~25 minutes)Time intensive for the clinician (~25 minutes)

Clinical subjectivity in evaluating performanceClinical subjectivity in evaluating performance

Semi-Structured Clinical Interview Semi-Structured Clinical Interview for Financial Capacity (SCIFC)for Financial Capacity (SCIFC)

25-30 minute clinical interview 25-30 minute clinical interview

Based on conceptual modelBased on conceptual model

Semi-structured: preserves clinical autonomySemi-structured: preserves clinical autonomy

Interview format with some props:Interview format with some props:

Includes interview of collateral sourcesIncludes interview of collateral sources

Assesses 8 domains and global financial capacityAssesses 8 domains and global financial capacity

Judgment rating for each domain and global: Judgment rating for each domain and global: capable capable

marginally capablemarginally capable

incapableincapable

Order of Financial Domains on SCIFCOrder of Financial Domains on SCIFC


Domain 1 Basic Monetary SkillsDomain 1 Basic Monetary Skills







Excerpted Domains on SCIFCExcerpted Domains on SCIFC


Domain 1 Basic Monetary SkillsDomain 1 Basic Monetary Skills







Who Is Ms. Y?

59 years old59 years old

African-AmericanAfrican-American

MarriedMarried

14 years of education14 years of education

RN and director of adult day careRN and director of adult day care

Financial Capacity Financial Capacity Training Video #1—040Training Video #1—040

Ms. YMs. Y

Who Is Mr. X?


CaucasianCaucasian

MarriedMarried


RetiredRetired

Last occupation: Last occupation:

architectural design construction supervisorarchitectural design construction supervisor


Mr. XMr. X

Who Is Mr. Z?


CaucasianCaucasian

MarriedMarried


RetiredRetired

Last occupation: Last occupation:

nursing assistant at VA hospitalnursing assistant at VA hospital


Mr. ZMr. Z

Research Findings UsingResearch Findings Using

SCIFC Clinical InterviewSCIFC Clinical Interview

SCIFC Study Sample at BaselineSCIFC Study Sample at Baseline

Controls Controls MCI MCI Mild AD Mild AD Mod ADMod AD

pp N=75N=75 N=58 N=58 N=97 N=97 N=31 N=31

AgeAge 66.1 (7.7)66.1 (7.7) 68.068.0 (8.3)(8.3) 72.4 (8.4)72.4 (8.4) 75.3 (8.4)75.3 (8.4).0001.0001

EducEduc 14.3 (1.6)14.3 (1.6) 13.7 (2.0)13.7 (2.0) 13.4 (2.1)13.4 (2.1) 11.1 (3.7) .000111.1 (3.7) .0001

Gender Gender (m/f)(m/f) 24 / 51 24 / 51 18 / 4018 / 40 52 / 45 52 / 45 10 / 21 10 / 21 .007.007

RaceRace 65 W, 10AA65 W, 10AA 44 W, 14 AA 44 W, 14 AA 85 W, 12 AA85 W, 12 AA 23 W, 8 AA23 W, 8 AA .12.12

MMSEMMSE 29.3 (1.0)29.3 (1.0) 28.2 (1.9)28.2 (1.9) 24.0 (3.1)24.0 (3.1) 16.4 (4.2)16.4 (4.2) .0001.0001

Physician CollaboratorsPhysician Collaborators

Britt Anderson, M.D. Britt Anderson, M.D. NeurologyNeurology

Patricia Goode, M.D. Patricia Goode, M.D. Geriatric MedicineGeriatric Medicine

Cleveland Kinney, M.D.Cleveland Kinney, M.D. Geriatric PsychiatryGeriatric Psychiatry

Anthony Nicholas, M.D.Anthony Nicholas, M.D. NeurologyNeurology

Terri Steele, M.D.Terri Steele, M.D. Geriatric PsychiatryGeriatric Psychiatry

Physician Capacity JudgmentsPhysician Capacity Judgments

• Study recruited 261 participantsStudy recruited 261 participants

• Study physicians made Study physicians made 11,11811,118 financial capacity judgments financial capacity judgments

• Each physician made an average of 2,224 judgmentsEach physician made an average of 2,224 judgments

• 627 ratings missing of 11,745 possible: 627 ratings missing of 11,745 possible: 94.7% completion rate94.7% completion rate

• Attests to effort/commitment of study physicians and staffAttests to effort/commitment of study physicians and staff

Basic Monetary Skills:Basic Monetary Skills:Judgment Outcomes By Percentage and GroupJudgment Outcomes By Percentage and Group

98 10092

66

0102030405060708090

100

Control MCI Mild AD Mod AD

Perc

en

tag

e

Capable

Marginal

Incapable

Control, MCI, mild AD differ from mod AD at p < .01 using GEEControl, MCI, mild AD differ from mod AD at p < .01 using GEE

Jts = 353 Jts = 282 Jts = 475 Jts = 155

Checkbook Management:Checkbook Management:Judgment Outcomes By Percentage and GroupJudgment Outcomes By Percentage and Group

9585

32

10

0102030405060708090

100


Per

cen

tag

e

Capable

Marginal

Incapable

Control differ from MCI at p = .06 Control differ from MCI at p = .06 Control, MCI differ from mild AD and mod AD at p < .01Control, MCI differ from mild AD and mod AD at p < .01

Mild AD differ from mod AD at p < .01Mild AD differ from mod AD at p < .01

Jts = 356 Jts = 267 Jts = 446 Jts = 144

Bank Statement Management:Bank Statement Management:Judgment Outcomes By Percentage and GroupJudgment Outcomes By Percentage and Group

93

72

33

4

0102030405060708090

100


Per

cen

tag

e

Capable

Marginal

Incapable

All groups differ at p < .01 using GEEAll groups differ at p < .01 using GEE

Jts = 357 Jts = 269 Jts = 435 Jts = 137

Global Financial Capacity:Global Financial Capacity:Judgment Outcomes By Percentage and GroupJudgment Outcomes By Percentage and Group

95

82

26

4

0102030405060708090

100


Per

cen

tag

e

Capable

Marginal

Incapable

All groups differ at p < .01 using GEEAll groups differ at p < .01 using GEE

Jts = 333 Jts = 282 Jts = 476 Jts = 155

Financial Capacity andFinancial Capacity and

the Alzheimer’s Disease Brainthe Alzheimer’s Disease Brain

Normal Brain AD BrainNormal Brain AD Brain

Loss of Brain Tissue in Alzheimer’s Disease

Normal Aging

Mild CognitiveImpairment

Alzheimer’s Disease

Conceptual Model of Declining Financial Capacity in aMCI and AD

Angular Gyrus and Financial CapacityAngular Gyrus and Financial Capacity

Results of VBM Analysis of Financial Capacity Instrument Scores in Patients with Amnestic MCI

(A) The cluster with maxima at coordinates 54, 48, and 44 on the glass brain projection (P=.08 corrected) (the second cluster was not significant after correction).

(B) The maxima of the above coordinates projected onto T1 MRI scans in each dimension for comparison.

Journal of the American Geriatrics Society, 58:265–274, 2010

Perhaps some day we will be able Perhaps some day we will be able to use MRI scansto use MRI scans

to help identify older persons to help identify older persons at risk for loss of financial capacity?at risk for loss of financial capacity?

““To those seniors and especially elderly veterans like myself, I want to To those seniors and especially elderly veterans like myself, I want to tell you this: You are not alone and you have nothing to be ashamed of. tell you this: You are not alone and you have nothing to be ashamed of.

If elder abuse happened to me, it can happen to anyone.” If elder abuse happened to me, it can happen to anyone.”

Mickey Rooney Mickey Rooney Testimony to Senate Special Committee on Aging, March 2, 2011 Testimony to Senate Special Committee on Aging, March 2, 2011

Outline 2: Outline 2: Prevention of Financial ExploitationPrevention of Financial Exploitation

The $18.1 Trillion Problem Facing UsThe $18.1 Trillion Problem Facing Us

Contractual/Transactional Approaches to PreventionContractual/Transactional Approaches to Prevention

Familial Approaches to PreventionFamilial Approaches to Prevention

Legislative Approaches to PreventionLegislative Approaches to Prevention

The $18.1 Trillion Problem The $18.1 Trillion Problem

% U.S. Households Across Age Group% U.S. Households Across Age Group

23.2 23.3 19.212.8

21.2

0102030405060708090

100

< 35 Years 35-44Years

45-54Years

55-64Years

65+ Years

Pe

rce

nta

ge

Adapted from D. Laibson, Age of Reason Lecture, June 2011 Morningstar Conference Adapted from D. Laibson, Age of Reason Lecture, June 2011 Morningstar Conference

% U.S. Household % U.S. Household WealthWealth Across Age Group Across Age Group

4.714.4

24.1 22.8

34

0102030405060708090

100

< 35 Years 35-44Years

45-54Years

55-64Years

65+ Years

Pe

rce

nta

ge

Adapted from D. Laibson, Age of Reason Lecture, June 2011 Morningstar Conference Adapted from D. Laibson, Age of Reason Lecture, June 2011 Morningstar Conference

All U.S. Households Balance Sheet[Federal Reserve Flow of Funds—2009]

Total = $53.1 TrillionTotal = $53.1 Trillion

From D. Laibson, Age of Reason Lecture, June 2011 Morningstar Conference From D. Laibson, Age of Reason Lecture, June 2011 Morningstar Conference

U.S. Household Wealth U.S. Household Wealth Across Age Groups Across Age Groups (in $ Trillion Dollars)(in $ Trillion Dollars)

53.1

2.57.6

12.8 12.118.1

0

10

20

30

40

50

All Ages < 35Years

35-44Years

45-54Years

55-64Years

65+ Years

$ T

rillio

n D

olla

rs

Adapted from D. Laibson, Age of Reason Lecture, June 2011 Morningstar ConferenceAdapted from D. Laibson, Age of Reason Lecture, June 2011 Morningstar Conference

$18.1 Trillion is at Risk$18.1 Trillion is at Risk Normal cognitive aging = the brain over age 65Normal cognitive aging = the brain over age 65

Age related improvement:Age related improvement:

Experiential pattern recognitionExperiential pattern recognition

““Wisdom”Wisdom”

Age related declines in multiple cognitive functions:Age related declines in multiple cognitive functions:

Short term memory capacityShort term memory capacity

Processing speedProcessing speed

Executive/planning abilitiesExecutive/planning abilities

Numeracy and arithmetic skillsNumeracy and arithmetic skills

““Fluid intelligence”Fluid intelligence”

Vulnerability to poor decisions and exploitationVulnerability to poor decisions and exploitation

“If the chance of getting a disease is 10 percent, how many people out of 1,000 would be expected to get the disease?”

78 78 76 74 7267

5851

0102030405060708090

100

% W

ith

Co

rre

ct

An

sw

er

Adapted from D. Laibson, Age of Reason Lecture, June 2011 Morningstar ConferenceAdapted from D. Laibson, Age of Reason Lecture, June 2011 Morningstar Conference

Normal Cognitive Aging and Financial CapacityNormal Cognitive Aging and Financial Capacity

We have focused on impact of prodromal (MCI) and clinical We have focused on impact of prodromal (MCI) and clinical

dementia (AD) on financial capacitydementia (AD) on financial capacity

But in terms of overall impact, But in terms of overall impact, normal cognitive agingnormal cognitive aging is the is the

greatest threat to financial capacity in the elderly:greatest threat to financial capacity in the elderly:

2009: 2009: 39.6 million elderly in U.S. 5.2 million with AD over 6539.6 million elderly in U.S. 5.2 million with AD over 65

2030: 2030: 72.1 million elderly in U.S. 7.7 million with AD over 6572.1 million elderly in U.S. 7.7 million with AD over 65

--www.aoa.gov/aoaroot/aging_statistics/index.aspx--accessed 29Feb2012--2011 Alzheimer’s Disease Facts and Figures, Alzheimer’s Association, p. 19

Prevention of Prevention of Financial Catastrophes Financial Catastrophes

and Exploitation in Older Adultsand Exploitation in Older Adults

Time MagazineSeptember 3, 2001

Approaches to Prevention: Approaches to Prevention: Contractual/Transactional Contractual/Transactional

Beyond the Durable Power of Attorney for Finances Beyond the Durable Power of Attorney for Finances

which authorizes a proxy to act financially for grantorwhich authorizes a proxy to act financially for grantor

Explicit advance planning for diminished capacity as part Explicit advance planning for diminished capacity as part

of specific banking, trust, investment transactionsof specific banking, trust, investment transactions

““Diminished Capacity” clauses?Diminished Capacity” clauses?

Explicitly recognize possibility of future diminished capacityExplicitly recognize possibility of future diminished capacity

Authorize financial institution to contact designated familyAuthorize financial institution to contact designated family

Set forth an agreed general plan of action Set forth an agreed general plan of action

Provide secure path of communication/action for institutions Provide secure path of communication/action for institutions

Approaches to Prevention: Approaches to Prevention: LegislativeLegislative

Increasing recognition that diminished financial capacity Increasing recognition that diminished financial capacity

is an inherent aspect of aging–both normal and is an inherent aspect of aging–both normal and

abnormal cognitive agingabnormal cognitive aging

Legislatures may wish to enact special protections for Legislatures may wish to enact special protections for

older adults as consumers and contracting partiesolder adults as consumers and contracting parties

Should there be a designated time period in which an Should there be a designated time period in which an

older adult and his/her family may unilaterally cancel older adult and his/her family may unilaterally cancel

without penalty incurred contractual obligations?without penalty incurred contractual obligations?

Could potentially reduce scam transaction activity?Could potentially reduce scam transaction activity?

Approaches to Prevention: Approaches to Prevention: FamilialFamilial

The best source of protection for a financially vulnerable The best source of protection for a financially vulnerable

elder is usually an aware and caring familyelder is usually an aware and caring family

““Family awareness” programs about financial Family awareness” programs about financial

vulnerability of older loved ones?vulnerability of older loved ones?

Modeled after drug awareness programs in teens? Modeled after drug awareness programs in teens?

Templates for family conversations on these difficulty Templates for family conversations on these difficulty

topics, and for developing appropriate protectionstopics, and for developing appropriate protections

Involvement of local banks, brokers, and other financial Involvement of local banks, brokers, and other financial

professionals? professionals?

CollaboratorsCollaborators

UAB Department of NeurologyUAB Department of NeurologyRoy Martin, Ph.D.Roy Martin, Ph.D.

Randall Griffith, Ph.D. Randall Griffith, Ph.D.

Kristin Triebel, Psy. D.Kristin Triebel, Psy. D.

Ozioma Okonkwo, Ph.DOzioma Okonkwo, Ph.D

Lindy Harrell, M.D., Ph.D. Lindy Harrell, M.D., Ph.D.

John Brockington, M.D.John Brockington, M.D.

David Clark, M.D.David Clark, M.D.

Richard Powers, M.D. Richard Powers, M.D.

Katherine Belue, B.S.Katherine Belue, B.S.

UAB Department of Biostats UAB Department of Biostats Alfred Bartolucci, Ph.D.Alfred Bartolucci, Ph.D.

UAB Dept of EducationUAB Dept of Education

Scott Snyder, Ph.DScott Snyder, Ph.D..

UAB Dept of PsychologyUAB Dept of Psychology

Virginia Wadley, Ph.D.Virginia Wadley, Ph.D.

UCSD Department of UCSD Department of BiostatisticsBiostatistics

Rema Raman, PhDRema Raman, PhD

Ron Thomas, PhDRon Thomas, PhD

NIH SupportNIH Support

Studies of Financial Capacity in Alzheimer’s Disease Studies of Financial Capacity in Alzheimer’s Disease (1 R01 MH55247)(1 R01 MH55247)

Alzheimer’s Disease Research Center Alzheimer’s Disease Research Center (1P50 AG16582)(1P50 AG16582)

A Longitudinal Study of Loss of Financial Capacity in A Longitudinal Study of Loss of Financial Capacity in Alzheimer’s Disease Alzheimer’s Disease (ADRC Project 2)(ADRC Project 2)

Functional Change in Mild Cognitive Impairment Functional Change in Mild Cognitive Impairment (1 R01 (1 R01 AG021927AG021927))

Questions?Questions?

Financial Capacity in MCI and AD:Financial Capacity in MCI and AD:

Psychometric Testing Psychometric Testing

Psychometric Assessment of FCPsychometric Assessment of FC

Direct assessmentDirect assessment of performance in a controlled setting of performance in a controlled setting

Standardized, objective scoring, norm referencedStandardized, objective scoring, norm referenced

Finely grained measurementFinely grained measurement versus vague informant report versus vague informant report

VerifyVerify patient and family report of financial abilities patient and family report of financial abilities

Useful clinical addition to traditional NP test batteryUseful clinical addition to traditional NP test battery

Disadvantages:Disadvantages:

May lack ecological validity—difficult to replicate community setting in clinicMay lack ecological validity—difficult to replicate community setting in clinic

Requires trained administrator and are time consumingRequires trained administrator and are time consuming

Tests of financial capacity not commonly availableTests of financial capacity not commonly available

Financial Capacity Instrument (FCI-9)Financial Capacity Instrument (FCI-9)

Standardized measure with scoring system and normsStandardized measure with scoring system and norms

Directly tests performance on:Directly tests performance on:

18 financial tasks18 financial tasks

9 financial domains9 financial domains

global (overall) financial capacityglobal (overall) financial capacity

Needs a trained administratorNeeds a trained administrator

Takes about an hour to administer to dementia patientsTakes about an hour to administer to dementia patients

FCI Video:FCI Video:

Domain 7—Bill PaymentDomain 7—Bill Payment

Task 7a: Understanding BillsTask 7a: Understanding Bills

Task 7b: Prioritizing BillsTask 7b: Prioritizing Bills

Task 7c: Preparation of Bills for PaymentTask 7c: Preparation of Bills for Payment

Research Findings Using Research Findings Using Financial Capacity InstrumentFinancial Capacity Instrument

FCI Study SampleFCI Study Sample

ControlsControls MCIMCI Mild AD Mild AD pp

NN 2626 3030 3434

AgeAge 66.2 (7.7)66.2 (7.7) 67.6 (8.9)67.6 (8.9) 73.4 (8.4)73.4 (8.4) .05.05

EducEduc 14.5 (2.4)14.5 (2.4) 14.6 (2.3)14.6 (2.3) 14.6 (2.7)14.6 (2.7) nsns

RaceRace 73% W73% W 77% W77% W 94%W 94%W nsns

GenderGender 69% F 69% F 57% F 57% F 60% F60% F nsns

MMSEMMSE 29.2 (1.1)29.2 (1.1) 28.5 (1.2)28.5 (1.2) 24.0 (2.9)24.0 (2.9) <.001<.001

DRSDRS 137.1 (4.6)137.1 (4.6) 130.9 (5.7)130.9 (5.7) 113.9 (10.2)113.9 (10.2) <.001<.001

CDR CDR sum boxsum box 0.0 (0.1) 0.0 (0.1) 1.0 (0.8)1.0 (0.8) 5.1 (1.3)5.1 (1.3) <.001<.001

Group Differences on FCI Total ScoreGroup Differences on FCI Total Score

282263

247

203

0

50

100

150

200

250

300

Domains 1-7

Raw

Sco

re Max Score

Control

MCI

Mild AD

C > MCI > AD

p = .0001

Task 7c: Preparing Bills for PaymentTask 7c: Preparing Bills for Payment

2723.9

21.9

13

0

5

10

15

20

25

30

Preparing Bills for Payment

Raw

Sco

re

Max Score

Control

MCI

Mild AD

C, MCI > ADC, MCI > AD

p = .0001p = .0001

Controls=36, MCI=35, Mild AD=53

Task 7c: Preparing Bills for PaymentTask 7c: Preparing Bills for Payment Time Time (in seconds)(in seconds)

300

115.9

150.9

208.6

0

50

100

150

200

250

300

Preparing Bills for Payment (time in seconds)

Raw

Sco

re Max Score

Control

MCI

Mild AD

C < MCI < ADC < MCI < AD

p = .0001

Controls=36, MCI=35, Mild AD=53

Raw Score/Time DissociationRaw Score/Time Dissociation

MCI patients can perform many financial tasks about as MCI patients can perform many financial tasks about as

well as controlswell as controls

But it often takes MCI patients significantly longer to But it often takes MCI patients significantly longer to

complete these tasks complete these tasks

Tasks are no longer as automatic and routineTasks are no longer as automatic and routine

At some point increasing task time = impairmentAt some point increasing task time = impairment

Documents

Impact of Dementia on Capacity to Manage Finances and Prevention of Financial Exploitation Daniel Marson, J.D., Ph.D. Professor of Neurology Director,