When most of us think of an estate plan, we think of wills and trusts—documents that help make sure our finances are managed properly after we’re gone and that our loved ones are provided for.

Less frequently discussed—and less frequently planned for—is what would happen to our finances if we’re still around but no longer able to manage them.

A new study by the Federal Reserve Board and the University of Michigan, found most older couples that experience dementia wait far too long before changing who’s responsible for financial decision-making in their household. As reported on the Squared Away blog from the Center for Retirement Research at Boston College, “80 percent of married older Americans who had been in charge of their household finances continued to manage them after a test revealed they were approaching or already experiencing dementia.”

On the positive side, the research found that couples with investment portfolios are twice as likely to switch who’s in charge of the finances when the primary financial decision maker develops dementia than couples that rely on passive income sources such as Social Security or company pensions.

However, one issue not addressed by the study is whether the healthy spouse is prepared to manage his or her household’s finances if needed. As we’ve reported before, on our most recent SMI member survey we asked, “If your household’s primary investment decision-maker died today, how well equipped would the survivor be to make such decisions?” Just 7% said, “Very well-equipped.” Another 29% said, “Somewhat well-equipped.” But the majority said “Not very well-equipped” or “Not at all well-equipped.”

While it's rare for anyone to get dementia before age 60, by age 85 about 35% have some form of dementia.

This new study adds more urgency to the need for couples to work together in managing their finances, or to at least create a plan for managing money if and when the primary money manager is no longer fit for the job.

As with many estate planning issues, this isn’t the most pleasant topic to talk about, nor does it seem that urgent when you’re healthy. Of course, when you’re healthy is the best time to talk about it and to start putting a plan in place.

Is this something you’ve ever talked about with your spouse?