Protecting a parent with dementia from financial exploitation
This article is for educational purposes only and does not constitute medical, legal, or financial advice. Every family situation is different, and you should consult with appropriate professionals about your specific circumstances.
Your mother calls you in tears. She's just realized she's spent thousands of dollars on something she can't quite remember. A grandchild borrowed money. A friend needed help. Someone online was selling something too good to pass up. The memory gaps are getting bigger, and now you're realizing that her financial vulnerability isn't just about keeping track of bills. It's about someone taking advantage of someone who can't quite hold all the pieces together anymore.
Dementia changes how your parent experiences money and decision-making. It doesn't mean your parent is incompetent—competency is a legal determination, not a symptom—but it does mean your parent is increasingly vulnerable to exploitation. The person your parent was would have caught the scam. The person your parent is now might not. People understand this, and some of them take advantage. A neighbor drops by frequently and your parent keeps giving them money. A romance develops online and your parent is sending cash to a stranger. A grandchild who's always been responsible with money suddenly needs larger and larger "loans" that never get repaid. The difference between bad judgment and exploitation can be hard to pinpoint, but the financial harm is real either way.
This is the hardest part of helping a parent with dementia: protecting them without controlling them, maintaining their autonomy while preventing catastrophic financial decisions. Your parent still has legal rights. They have the right to make their own choices, even bad ones, unless a court has determined they're incompetent. You can't simply take over. But you can put systems in place that make exploitation harder, and you can learn to see the early warning signs.
Tracking Your Parent's Money
The foundation of financial protection is understanding what your parent has and where it is. You need to know the account numbers, institutions, current balances, and monthly changes. This isn't about invading privacy unnecessarily. It's about having the information you'd need if your parent becomes unable to make financial decisions, or if you need to prove to a court or a financial institution that something is wrong.
Start by having a straightforward conversation with your parent about financial matters. If your parent still has capacity to understand financial discussions, explain that you want to help keep things organized and secure. Ask your parent to show you where important documents are kept. Ask for access to a complete list of accounts. Many banks and investment firms will add a family member to an account as a joint account holder or authorized user, which gives you visibility without necessarily giving you full control.
Create a master list of all accounts: checking accounts, savings accounts, investment accounts, retirement accounts, insurance policies, real estate, and vehicles. Include the institution name, account type, account number, current balance, and the names on the account. Update this list quarterly. You're not looking for surprises necessarily, but if you're checking regularly, you're more likely to catch a problem early.
Review statements for each account monthly. You're looking for transactions that don't fit your parent's pattern. If your parent has never bought anything online but suddenly there are online purchases, that's a flag. If your parent usually spends modestly on groceries and gas but suddenly there's a large transfer to an unfamiliar person, that's a flag. If regular automatic payments have stopped, that's also a flag. You're not judging your parent's spending, you're looking for changes that might indicate confusion or exploitation.
Know what your parent's income is and when it arrives. If your parent receives Social Security, when does it arrive and how much? If there are pension payments, disability payments, or investment income, know the amounts and timing. Now compare that to the outflows. If your parent is spending more than they're earning, you need to understand where the extra money is coming from and where it's going. This is where you often discover that your parent has been lending money, giving money away, or making purchases they didn't fully understand.
Pay special attention to accounts that don't appear on statements. Some older adults still have savings accounts at local banks they opened decades ago, accounts they never check. They might have bonds or other investments they've forgotten about. They might have a safe deposit box with cash or valuable papers. You're not snooping, you're trying to get a complete picture. If you can't locate something, that's important information too.
Managing Day-to-Day Finances
Once you understand what your parent has, the next step is making sure bills get paid on time and fraud becomes more difficult. If your parent still wants to be involved in financial decisions, you can support that while adding protective layers.
Set up automatic bill payments for all regular expenses. Mortgage, property taxes, insurance, utilities, medical expenses—anything that comes due on a schedule should be on automatic payment from a bank account. This ensures bills get paid even if your parent forgets or is confused about what's due. It also means you know exactly what's leaving the account each month. If bills are paid automatically, any additional large transfers stand out more clearly.
If your parent still pays some bills manually, offer to help organize them. Create a folder with a checklist of what needs to be paid each month. Help your parent pay the bills by sitting with them and reviewing the process, if they're able to do this. If they can't, propose setting up automatic payments instead.
Open a joint bank account with your parent if possible, or become an authorized user on their existing account. This gives you access to see all transactions without your parent having to grant you explicit permission each time. Many banks allow you to set up alerts for large transactions or transfers, which means you'll get a notification if something unusual happens.
Discuss spending rules with your parent while they still have capacity to have this conversation. Suggest that any transaction over a certain amount,five hundred dollars, a thousand dollars, whatever seems reasonable,requires approval from you or another trusted family member. This isn't punishment or control. It's a safeguard. Your parent might not remember the conversation later, but the rule can be enforced by the bank or by you if you're monitoring accounts.
Talk to your parent about the difference between lending money to family members and giving it as a gift. If a grandchild asks to borrow money, that should come to you for discussion before the decision is made. Not because your parent isn't allowed to help family, but because dementia can make it hard to remember that the money was "borrowed" rather than given, and people can take advantage of this confusion. A clearer rule,all money that leaves the account gets discussed first,protects your parent from being exploited by family members or anyone else.
Protect your parent's access to credit and cash. If your parent has credit cards, consider having one card with a very low limit for everyday purchases, and keep the others secured. Too many people with dementia wake up to find they've taken out multiple credit cards in their name without remembering, often after being contacted by mail or online. Similarly, if your parent tends to give cash away to people who ask, limiting the amount of cash your parent carries or accesses at once reduces the risk of large gifts or loans made on impulse.
Maintain detailed records of all financial transactions, especially any unusual ones. If you later need to prove that your parent was being exploited, you'll need documentation. Keep statements, bank statements, and notes about any concerning transactions. If you've discussed something with your parent and they've agreed to a safeguard, document that conversation.
Planning for the Long-Term
As your parent's cognitive decline progresses, you need to shift from helping your parent manage finances to managing finances on your parent's behalf. This requires either your parent's voluntary agreement to transfer authority to you, or a legal process that grants you authority.
Talk to your parent about establishing a power of attorney while they still have capacity to do this. A financial power of attorney allows your parent to name you as the person who can make financial decisions on their behalf. This is voluntary and can take effect immediately or can be "springing," meaning it only takes effect if your parent becomes unable to make their own decisions. An attorney can help you draft this document and ensure it meets your state's requirements.
Project how long your parent's money will last. Look at the monthly expenses compared to income and savings. If your parent is spending more than they're earning, you need to know when the savings will run out. This isn't a cheerful calculation, but it's essential. It affects decisions about long-term care, whether your parent will need to sell the house or other assets, and whether you need to apply for government benefits like Medicaid.
Identify which assets can be accessed quickly if needed and which are tied up. Your parent's house has equity, but accessing that equity takes time and involves costs. Brokerage accounts can usually be accessed quickly. Retirement accounts have rules about withdrawal. Knowing the difference matters when you're trying to figure out how to pay for care.
Plan for worst-case scenarios. What happens if your parent needs residential care? What happens if your parent lives much longer than you expected? What happens if you become unable to manage your parent's finances? Having a backup plan for each of these scenarios prevents crises from becoming catastrophes.
Consider setting up a trust if your parent has significant assets and if the probate process would be lengthy or expensive. A trust also provides continuity. If something happens to you, the trustee can be replaced without going to court. A trust can also make it harder for someone to fraudulently change documents after your parent's death, because the trust terms are already set.
Document everything you do. Keep records of any conversations about financial matters with your parent. Keep records of decisions you've made on your parent's behalf. Keep receipts and invoices. Keep bank statements. If you're ever questioned about your management of your parent's finances,and in a legal proceeding this is possible,you want to be able to show that you acted carefully and in your parent's best interest.
Most importantly, don't try to do this alone. Consult with an elder law attorney about power of attorney, trusts, and guardianship if you think that will be necessary. Work with your parent's financial advisor if they have one. If not, consider hiring a fee-only financial advisor who can help you understand whether your parent's money will last and what changes might be needed. If you're concerned that someone is exploiting your parent, consult with Adult Protective Services or law enforcement. You're not being paranoid. You're being realistic.
How To Help Your Elders is an educational resource. We do not provide medical, legal, or financial advice. The information in this article is general in nature and may not apply to your specific situation. If you are concerned about a loved one's cognitive health or safety, consult with their healthcare provider or contact your local Area Agency on Aging for guidance and support.