Mental health, dementia prompt financial perils and options for families
Intervene early, lawyer and psychiatrist advise
Thousands of families across Canada are facing a problem that few talk about: a health condition that prompts a family member to spend wildly or make uncharacteristic financial mistakes.
People with certain types of mental conditions, such as Alzheimer's disease and bipolar disorder, may not fully grasp the consequences of their spending.
"It started with my dad saying, 'You know, I forget peoples' names more than I used to,'" says Sandy Pirie in Halifax. His 83-year old father was diagnosed with Alzheimer's five years ago.
After his diagnosis, Edward Pirie, who had always been an astute investor, started to make unusual choices. He bought a vehicle for almost $30,000 when a model worth less than $20,000 would have been fine. Sandy Pirie says Edward made mistakes on his taxes that would have cost him tens of thousands of dollars.
Then one day, Edward went to the bank and made a huge cash withdrawal.
"They gave him several thousands of dollars in cash. But he really didn't have an understanding of what he was doing at that point in time."
Sandy says the money could have easily been lost because his father was "giving money away as tips — appreciation for things but it was out of proportion than what most people would consider normal."
Another person who's experienced financial problems because of his health condition is Andrew Canfield, 26, of Dartmouth, N.S. Canfield was diagnosed with bipolar disorder a few years ago. He has spent lavishly during manic phases.
'I'd just purchase things impulsively'
"I've spent money on expensive jewellery. I have bought mountain bikes and road bikes. I've spent money on just going out to eat a lot, you know, expensive restaurants. Going out with friends and buying everybody drinks."
Canfield says he couldn't resist the impulse to buy and didn't think about the consequences.
"I'd just purchase things impulsively and it felt really good at the time. But eventually when I came off this high I would definitely regret it."
Dr. David Goldbloom is a psychiatrist at the Centre for Addiction and Mental Health in Toronto. He says it's common for people with bipolar disorder to go on spending sprees.
"Some of it may be driven by a grandiose sense of what they're worth or what they're going to earn."
"People often experience a kind of euphoria that almost feels like a drug-induced high, except that there are no drugs involved. This is the brain turning on itself. And in that exalted, euphoric state, they often feel that their capacities are limitless. Their potential is enormous and that their success knows no boundaries."
Goldbloom says some families have learned to cope with the manic phases.
"I've had many patients with bipolar disorder who recognize the signs when they're starting to go high. Or their families recognize it and intervene early. That's the most important thing, is early intervention. Trying to close the barn door after the horse had bolted is really challenging."
Some have questioned why banks don't step in to limit people's spending.
In an email from the Canadian Bankers Association, a spokesperson says bank staff try as best they can to flag unusual behaviour by a customer, such as coming in several times in one day.
But front-line bank staff can't make judgments about people's mental state. The bank will intervene if it gets legal instruction.
"As a lawyer, I get a lot of phone calls, cold calls," says Bianca Krueger, a lawyer in Halifax who specializes in wills, estate and trusts law.
She says the two best legal tools for families to deal with this problem are power of attorney or legal guardianship.
A family member can take control of another's financial affairs with a power of attorney, but that person has to be of mental capacity to provide consent.
The other option — legal guardianship — comes into play when a person is no longer of capacity.
Krueger says it's "a court application that nobody enjoys. It's under the incompetent person's act [in Nova Scotia], having them deemed incompetent."
Kruger says it's better for the family to enact a power of attorney while a person can still give consent. "Far easier to have somebody appointed that you wanted appointed."
But not all families have to turn to a legal measure to control unwanted spending sprees because of a health condition.
Andrew Canfield cut up his credit card. He and his dad went to the bank and arranged a system to allow his father to monitor all of his spending on his debit card.
"I won't probably deal with a credit card until I'm a bit more stable and further into my recovery."