Get Ready Now for When You Can't Handle Your Money

NEW YORK (TheStreet) -- We've all heard about the risk of outliving our money, but that one has a companion: outliving your ability to handle your money.

One in 10 men and one in five women will suffer dementia, and for those who live past 85, the figure soars to 50%, says Steve Starnes, a financial planner with Savant Capital Management, speaking in an interview with Morningstar, the market-data firm.

How do you prepare for a time you might not be able to make sound financial decisions?

Because dementia comes on quietly and is hard to spot, it's difficult to know at what point others need to step in. A person with diminished abilities may not be able to decide when to make a financial handoff, and family members may be divided over what to do.

In fact, Starnes says, difficulty with finances can be one of the first symptoms of dementia, and people can make costly mistakes before anyone realizes there are problems. He cites a client who had withdrawn all his IRA assets in a single year, creating a whopping $100,000 tax bill that could have been avoided.

"He didn't know what he was doing but otherwise [seemed] very healthy," Starnes recalled.

To avoid this kind of mess, older folks should talk over the subject with family members well before any signs of trouble arise, and they should consolidate accounts and assemble clear records to make it easier for someone else to take over, he suggests.

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