Alcohol on their breath. A haggard appearance. Irregular account withdrawals. Missed meetings and unreturned phone calls.

These signs may suggest someone you know has an addiction, and their financial plans could be in jeopardy.

Substance dependency or abuse affects one in five Canadians, says Statistics Canada. And 33% of Canadians are eventually affected by either an addiction or a mental illness. Unlike the stereotype, mental illness and addiction affect the old and the young; women as well as men; and the rich as well as the poor. You should be prepared to encounter colleagues, friends or family members with addictions, be they to drugs, alcohol, gambling or something else.

Warning signs

If a person’s demeanour changes from sunny to abrasive over time, or if someone who’s generally well-groomed starts looking unkempt and unhealthy, these are indicators, says Megan Hemlow, a clinical social worker in Hamilton, Ont.

And if someone who was usually organized now often misses or reschedules meetings, neglects responsibilities, or delays making decisions, these too are signs.

A big tipoff might be unexpected changes to long-term financial goals, says Hemlow. If saving for a cottage was important when the person started investing, and now he wants to stop saving, be wary. An increase in account withdrawals or transfers can also be a sign.

“A general trajectory with substances and money is smaller pockets being taken out quite frequently,” says Hemlow.

With a gambling addiction, “you’re more likely to see larger sums of money being taken out,” she says. “You’re also quite likely to see folks moving into lines of credit, credit cards or loans because intrinsic in a gambling addiction is the idea that if I just play one more time, I can win it all back.”

What to do

If a colleague tells you he has an addiction, offer a list of mental health professionals. Social workers and addictions counselors can also help, says Ian Macnaughton, principal of Vancouver’s TransitionPoint Coaching, which helps wealthy families deal with conflict. There are a variety of treatment approaches, he adds, so warn the person that not every professional will be be a perfect fit.

Laprade goes further: “It’s not enough just to make a phone call. There’s a strong impact when you say, ‘I’ll organize the first meeting. I’m happy to attend with you.’” It’s the support and the connection that’s important.

Sometimes, the person’s family may reach out for help. If that’s the case, they could probably use some emotional support too, says Macnaughton. Offer to connect them with a therapist, or to a support group for family and friends of people with addictions. You could also offer to set up a family meeting. Macnaughton says the family should guide the gathering.

The person may not admit to or understand their addiction. They may be wary of telling you about their weaknesses. Even if they deny having an addiction, tell them you’re always available to help.

Springing PoA

Friends and families watching as someone is consumed by addiction may wonder if there’s a legal way to intervene. The answer, in the majority of cases, is no.

Most people with addictions don’t meet the definition of mental incapacity that the courts use to appoint a guardian, says capacity lawyer Jan Goddard, partner at Goddard Gamage Stephens in Toronto. In that case, they’re legally entitled to make bad choices.

A better route for someone with a history of addiction may be to set up a safeguard in case of a relapse. One strategy is a springing power of attorney, says Goddard, who warns it’s difficult to draft.

Springing PoAs are triggered when the specific set of circumstances it outlines are met, explains Goddard. The problem with designing one to come into effect when someone relapses is anticipating the exact circumstances.

“You really have to think through well what’s happened in the past, and how would this be proved,” she says.

For instance, if someone starts drinking again, what’s the line between use and abuse of alcohol? Or if the person wants his physician to weigh in, what if the doctor retires? If the trigger would be signs someone isn’t taking care of themselves or their finances, what exactly would they have to neglect? The PoA must be specific and take into account as many scenarios and contingencies as possible.

Once the PoA has been established, the attorney could have difficulty exercising it. Further, “the bank’s going to want a copy of whatever documentation there is around the fact that the trigger has been pulled, and now that’s going to sit in the bank’s file,” says Goddard.

Instead, a two-part arrangement would protect the person’s privacy. First, their lawyer would hold a formal direction, detailing the addiction behaviours that would trigger a general PoA. If those specific conditions were met, the lawyer would hand the general PoA to the attorney. The general PoA would authorize the attorney to act, but wouldn’t contain details about their addiction.

Putting a springing PoA into place would require them to be frank about their addiction. “I couldn’t draft something like that for a client unless the client actually said to me, ‘These are the kinds of things I’ve done in the past, and I don’t want my money to be lost because I do them again in the future,’” says Goddard.

Safeguarding investments

People with addiction issues such as gambling can set natural financial limits to their actions. In that case, they may consider an annuity or segregated fund. Though these can be costly, they would give them capital protection and stable income for life. If those aren’t suitable, they may consider keeping investments in a traditional portfolio and revisiting risk tolerance and capacity.

Risk tolerance can be tricky for someone with a gambling addiction, adds Hemlow. They may profess to have high tolerance, but investing itself could be an addiction trigger because it reminds them what it’s like to win money, she explains.

“If you’re working with someone with a gambling addiction you might want to gently recommend they go a safer route for now,” she says.

Supporting recovery

There can be a two- to three-month waiting time for addictions treatment in Ontario, says Hemlow. But if the person has private insurance or can pay himself, he can start treatment in days.

Laprade warns that wealthy clients may think checking into rehab will get them the best care, but that’s not always true. There are a variety of inpatient and outpatient treatment options. And if they’re taken away from their community, it can be traumatic.

As the person starts recovery, call to check in and offer to go for coffee. He could be feeling isolated—and isolation could lead to a relapse.

Also, identify financial triggers. If the person gets government benefits, a tax refund or trust money, having this cash could provoke a relapse, says Hemlow.

With the person in recovery, you or family members may want to start addressing financial matters, especially if the addiction has harmed a family business or trust. Remind people to be patient, says Laprade. She warns that asking the person to make decisions too early can jeopardize his recovery and have a negative impact on the family and business.