Are you familiar with the term “sandwich generation”? If you’re currently caring for your children and your elderly parents, all the while trying to save for retirement, consider yourself a member. As a member of the sandwich generation, it’s critical that you be sure your estate plan reflects your current situation.
A Balancing Act
First, let’s start with the “bottom” part of the sandwich, your children. Assuming they’re still in their formative years, make them your top priority. At this stage, you’ll still have most of the control over the decisions affecting their lives. These involve personal choices that are different for every family.
The “upper” half of the sandwich can be more problematic. Depending on their health status and other factors, including finances, your parents may resist your efforts to assist them. They may be oblivious to changes or dismissive of your concerns. And their attitude might range from being cooperative to highly resistant.
The first thing to do, and perhaps the most important, is to initiate a family meeting. Invite all the key players — your parents, siblings and, as appropriate, their spouses, at the least — to the gathering. This could be difficult to arrange, especially if certain relatives reside in far-flung places, but it helps if you can meet face-to-face.
What should you discuss? Cover the entire estate planning gamut. This isn’t the time to be evasive — the dialogue should be frank and honest. Many issues can be sensitive and emotions can run high, so be prepared for some hand-wringing or pushback.
You probably won’t be able to accomplish all your objectives in a single session. Consider meeting again with as many of the other parties as possible. In fact, you might broaden the circle to include us. Take as much time as you need to work things out.
Estate Planning Tools
Of course, once you develop a concerted approach, you’ll need to implement the main concepts. Typically, this requires the drafting of certain estate planning documents that meet legal requirements. The complete list will vary family-to-family, but here are some basic components:
If a legally valid will has been executed, your parents’ assets will be distributed in the manner described within. In addition, an existing will may have to be modified or replaced due to extenuating circumstances. For instance, your parents might want to add a grandchild to the list of beneficiaries or change direction due to a divorce in the family. Review the last updated version of the will periodically.
Durable power of attorney.
This document authorizes someone to handle your parents’ affairs and health care decisions in the event of disability or incompetence. This might be you or a sibling. Typically, the power of attorney, which expires on death, is coordinated with a living will and other health care directives.
Letter of instructions.
Although it isn’t legally binding, the letter can be as important as a will. It generally provides an inventory and location of assets; account numbers for securities, retirement plans and IRAs and insurance policies; and a list of professional contacts. It may also be used to state personal preferences, such as funeral arrangements.
A living will spells out your parents’ desires relating to life-sustaining measures in the event of a terminal illness. It specifies what means should be used, and not used, but doesn’t provide legal authority for anyone to act on their behalf. For this reason, it may be coupled with a health care power of attorney.
Revocable living trust.
By transferring assets to a revocable living trust, your parents can continue to manage those assets while they are still alive. A revocable living trust avoids probate, keeps personal information private and allocates the trust assets to one’s heirs.
Keep Calm And Learn Your Options
It’s easy to become overwhelmed when confronting the financial (and emotional) responsibilities of funding your retirement, raising your children and supporting your aging parents. Talk to us about your estate planning options.