Written By
Lee Przybyla, CFP®, Vice President Financial Planning
and Ed Kreusel, CFA, Investment Advisor
The families we serve have worked diligently to build and preserve wealth across generations. Yet even the most sophisticated families can overlook one critical aspect of wealth preservation: planning for unexpected incapacity—whether from cognitive decline, sudden illness, or injury.
This isn’t about fear or pessimism. It’s about opportunity—the opportunity to protect your family’s financial security, preserve decision-making autonomy, and ensure your wealth serves its intended purpose, even if your cognitive abilities change over time.
The Reality Behind the Numbers
Consider Mike’s story. At 54, this successful production manager came home one afternoon and announced he had retired. His wife was blindsided—they had never discussed retirement timing, and this impulsive decision would reshape their entire financial future.
Medical evaluation soon revealed the cause: frontotemporal dementia, a form of cognitive decline that often strikes between ages 40 and 65. Unlike the Alzheimer’s many of us are aware of, FTD can begin with behavioral changes and impaired judgment years before memory loss becomes apparent.
The financial consequences cascaded quickly. Mike’s income disappeared. His employer-sponsored health insurance vanished. At 54, he was too young for Medicare and faced penalties for accessing retirement accounts. Because dementia rarely qualifies for disability programs, the family had no safety net—and faced potential long-term care costs of $50,000 to $120,000 annually.
While Mike’s situation was extreme, it illustrates a broader truth: incapacity can affect anyone at any age, and the financial implications extend far beyond the individual to impact entire families and multigenerational wealth plans.
Why Even Affluent Families Are Vulnerable
Approximately 70% of Americans will require some form of long-term care during their lifetime, whether assisted living, memory care, or skilled nursing. For those over 65, about 35% will spend time in a nursing home.* The costs are substantial and rising. Assisted living typically begins around $4,000 monthly, memory care facilities range from $6,000 to $12,000 monthly, and skilled nursing care starts at $10,000 monthly and escalates based on care intensity*.
But for many families, the financial impact goes deeper than monthly care costs:
- Business continuity: What happens when a founder or key executive begins showing signs of impaired judgment? Who has the authority to step in, and under what circumstances?
- Trust and estate administration: If a trustee or executor develops cognitive issues, are succession plans in place? Can assets be protected without lengthy court proceedings?
- Investment authority: When should investment decision-making be transferred, and to whom? What mechanisms prevent a vulnerable family member from making detrimental financial decisions?
- Family dynamics: How do you balance a loved one’s dignity and autonomy with the need to protect family wealth?
These questions become exponentially more difficult to answer during a crisis. The time to address them is now, when clarity and calm decision-making are possible.
Integrated Planning Before Crisis Strikes
This is precisely where comprehensive wealth management creates lasting value. At Sendero, we approach cognitive decline planning as an essential component of a broader family wealth preservation plan—not as an uncomfortable afterthought.
Our integrated approach encompasses:
- Financial Planning Expertise: We help families stress-test their plans against various scenarios, including incapacity of a family member. We identify gaps in insurance coverage, income replacement strategies, and liquidity needs that could leave families exposed.
- Tax and Estate Planning: Working alongside your legal counsel, we help ensure your estate documents include appropriate provisions for cognitive decline—from healthcare proxies and durable powers of attorney to trust structures with clear succession provisions and standards for determining incapacity.
- Family Engagement: Perhaps most importantly, we facilitate the difficult conversations families often avoid. Our family engagement process creates a structured environment for discussing roles, responsibilities, and decision-making protocols before they’re needed. This includes defining clear triggers for when authority should transfer and ensuring all family members understand the plan.
- Ongoing Oversight: We maintain institutional knowledge of your family’s intentions, values, and structures. If cognitive concerns arise, we can help execute predetermined plans smoothly, minimizing family conflict and protecting wealth during vulnerable transitions.
A Simple Yet Powerful Action Step
Here’s what we know from decades of serving multigenerational families: the best plans are reviewed regularly and updated proactively. We recommend every client review their will and comprehensive estate plan with their advisory team at least every five years—or sooner if there are significant life changes such as births, deaths, divorces, business transitions, or changes in health.
These reviews aren’t perfunctory. They’re opportunities to ask critical questions:
- Do your documents reflect your current family structure and wishes?
- Are the right people designated for critical roles, and do they understand their responsibilities?
- Have you had explicit conversations about your wishes regarding medical care and financial decision-making?
- Does your family know where to find important documents and whom to contact in an emergency?
- Are there new planning tools or strategies that could better serve your goals?
Moving Forward with Confidence
We share these insights not to alarm you, but to empower you. Cognitive decline is one example of a crisis that doesn’t have to be financially devastating. The families who navigate these challenges most successfully are those who plan ahead—who have difficult conversations when everyone is healthy, who put appropriate structures in place before they’re needed, and who partner with advisors capable of coordinating the complex financial, legal, and family dynamics involved.
At Sendero®, we have the expertise and resources to help you address these scenarios comprehensively, whether you’re planning proactively or navigating a current situation. Our low client-to-advisor ratio ensures you receive the individualized attention these sensitive matters require, and our team approach means you benefit from deep expertise across financial planning, tax strategy, estate planning, and family governance.
If it’s been more than five years since you’ve reviewed your estate plan—or if you’ve never had a comprehensive conversation about cognitive decline planning with your advisory team—we invite you to reach out. The peace of mind that comes from knowing your family is protected is among the most valuable assets we can help you secure.
Disclaimer: The scenario described in this article is based on real circumstances, though names and identifying details have been changed to protect privacy. This article is for informational purposes only and does not constitute legal or tax advice. Please consult with appropriate legal and tax professionals regarding your specific situation.
*Source: https://grok.com/share/c2hhcmQtMw%3D%3D_56cf72c3-013a-46c7-9b37-a95ef6289cbc
