Working with cognitively impaired taxpayers.

• Author: Wolbach, Kristine R.

Tax professionals (such as CPAs) are often the first to see signs that a client is in the early stages of cognitive decline. This recognition should begin the process of communication with family members, attorneys, investment advisers, insurance consultants, and medical professionals who are more involved in the client's care and well-being. CPAs can also have preliminary discussions with clients to plan for disability and ensure that estate planning documents are in place. Planning early in the process allows strategies to be implemented when they are most effective.

The issue of planning for disability can be raised at the annual tax interview for senior clients. Often, a client or spouse will confide with the CPA a diagnosis of dementia or other cognitive disorder. The CPA should be watchful of changes in a client's ability to manage financial affairs. Signs that the client's cognitive abilities may be in decline could include investments in risky securities, struggles to organize annual tax documents, an inability to access technology, or other uncharacteristic behaviors.

Clients age 70 and above often welcome discussions relating to their estate plan. The CPA can make inquiries of senior clients to identify trusted advisers and existing estate planning documents. CPAs can document existing relationships with financial advisers and trusted family members and their contact information. Inquiries as to existing legal documents including wills, durable powers of attorney, health care directives, health care powers of attorney, community and separate property agreements, and trusts may lead to discussions of changed family financial goals.

CPAs can help clients prepare a list of assets owned and accounts, including their location and other information, so that a trusted family member can easily identify bank and brokerage accounts and safe deposit boxes. The list should include digital assets and passwords to online accounts and for computers and other electronic devices. The lists should be stored in a secure location. Digital assets can include bitcoin and other cryptoassets, nonfungible tokens (NFTs), social media content, domain names, rights to music or movies, and digital photos and videos.

Many estate plans will need updating to account for ownership and access to digital assets. If the value of digital assets is significant, consider appointing a special executor who has expertise managing digital accounts. If digital assets are...