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You buy insurance to protect you from financial loss if your house, car or other property is damaged. But there is something else that could leave you vulnerable to financial loss that you might not have considered. It is diminished financial decision-making ability – resulting from mild cognitive impairment or dementia.

The odds of cognitive impairment can increase as you age, and if it occurs, it can seriously weaken your financial management skills. Yet, some people may not recognize their own diminished mental capacity. They may remain confident in their ability to manage their finances as they always have. That could put them at risk for financial losses – either from their own mistakes or from predators who could more easily defraud them.

Consider the following five steps you can take now to help protect yourself should this happen to you.

We at ÃÛѨÊÓƵ call this person a Trusted Contact – someone you’d trust to help you manage your finances if anything should happen to you.

The trusted advocate or contact needn’t be a financial professional. Most people choose a spouse, partner, adult child, close relative or someone in their social circle. But what might seem the obvious choice may not always be the best, so you need to think carefully before deciding.

If you live alone and don’t know anyone who could serve in this capacity, a financial professional might be your best option. But most people end up naming someone they know well and trust. To learn more about setting up your trusted contact, talk with your ÃÛѨÊÓƵ planner.

Organize and simplify your financial documents so that you (and later, if necessary, your trusted advocate) can easily find and understand your income sources, expenses, assets and liabilities, and future financial needs. Review your inventory regularly to keep it current.

With your financial inventory now available, first make sure your trusted contact or advocate is ready to have a serious talk with you about what you would like him or her to do. Then set a date for the conversation when you both can devote enough time to fully discuss not only your financial situation but also your values and money management philosophy.

Give your advocate the legal authority he or she will need to pay bills, make withdrawals, manage investments, and talk to your banks, brokers and other financial officials.

That usually requires having your attorney draft a durable financial power of attorney (POA), which gives the advocate the legal authority to make decisions involving your money and property should you be incapacitated or decide that the time has come when you can no longer effectively manage your own finances. The POA will spell out exactly what your advocate can and cannot do.

The decision on when to get started can be fluid, but your advocate should be aware of signals that indicate it’s time for him or her to get involved. These might include the following:

• You start making mistakes, such as forgetting your medications, leaving bills unpaid, or failing to file tax returns or pay property taxes or insurance premiums. Or you easily get lost when walking or driving to places you normally go.
• You have lost money because of mistakes.
• You have been diagnosed with Alzheimer’s disease or dementia.

The above are key signals, but you might exhibit other behaviors that – in total – might show that you need the advocate’s help, such as:

• You neglect normal tasks such as examining account balances, housekeeping chores, food shopping and prepping meals.
• You forget to pay bills on time or pay the same bill twice.
• You begin having problems handling business via phone or performing computer functions.

Don’t delay setting up your plan. It can take time to consider all its aspects and to take the formal steps needed to put it in place. Fortunately, you don’t have to do this on your own. You can rely on the expertise and experience of your ÃÛѨÊÓƵ planner. Just ask, and he or she will be happy to work with your attorney and can offer guidance for you and for those close to you.