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Estate Planning for the Sandwich Generation

| May 29, 2018 | Estate Planning |

When you’re caring for your aging parents as well as young or adult children, what does that mean for your estate planning? This is a question often asked by the baby boomers, of which there were 74 million in the United States as of 2016 [1]. Baby boomers are the current sandwich generation as well—those adults who are “sandwiched” between caring for elderly parents or older relatives as well as caring for their own children, many of which returned home as a result of the financial crisis. So what does this mean for estate planning when this generation has, in essence, two families to plan for? Let’s take a look.

Early Planning is Essential

Having some kind of plan in place is crucial. Even if you go back and make changes—and you likely will—having those documents protects you as well as your parents and children. The earlier you make financial and estate plans, the better. Planning for retirement when in this situation can be a challenge, and a financial planner may be required to give boomers a clear idea of what to expect and how to plan.

Along with financial planning for yourselves is planning for your children. If you have younger kids and are saving for college, how does that impact your retirement goals and other expenses? If you are helping your older children buy a house or afford rent, what are the expectations and do you have important agreements in writing? No one particularly likes paperwork, but having even an informal agreement that you and your child sign can be helpful in making sure both of you are clear on what’s expected for amounts, repayment schedules, and goals.

How about your parents? Do they have medical expenses that you plan to help them with? What about transportation, food, or other living expenses? How do these added financial items affect your savings?

Talking to a financial planner can help get all of these separate items pulled into one coherent plan and give you a better idea of what to expect when juggling multiple generations.

Remember Medical Documents

In the stress and anxiety of caring for multiple households, it’s easy to lose track of important tasks. Don’t let medical documents, wills, and powers of attorney fall into that black hole. Ensure that your parents have their wishes for medical care filed correctly and legally so that when the inevitable time comes, no one has to guess at what they would want. You may also want to consider having a designated spot for these important documents so they’re easily reached during an emergency and you don’t have to go on a search in the middle of a crisis.

The documents you may want to consider are:

  • Medical power of attorney
  • Mental health power of attorney
  • Maryland MOLST
  • Advance directives and DNR wishes

What Happens If Something Happens to You?

Finally, if something were to happen to you, would there be documents showing your wishes not only for your own care, but how you want your assets to be divided to appropriately care for your loved ones? The role of caring for so many can result in caregiver stress syndrome, or caregiver burnout, and often leads to the caregivers themselves coming down with serious illnesses as a result. It is better to be proactive and have these plans in place before they’re needed rather than wait for something to happen. You can state in your will how much assistance you would like to go to your parents, if needed, how much should go to your children, and what goes to charities or other relatives.

If you expect larger sums of money to be passed to a particular person, or if you expect funds will be stretched over many years, a trust may be the wiser option. A trust can be created to fit almost any need, including educational, medical, special needs, spendthrift, and more. By placing funds into a trust rather than passing them all at once, you ensure that the funds will be used only for what the trust stipulates and also that the money should last as long as it’s intended.

Documents you will want to consider for estate planning, including the above medical items, are:

  • A living will
  • Revocable or irrevocable trusts
  • Special needs or educational trusts
  • Durable powers of attorney

[1] “American Generation Fast Facts.” August 27, 2017. CNN Library. https://www.cnn.com/2013/11/06/us/baby-boomer-generation-fast-facts/index.html