For the millions of baby boomers in the “sandwich generation,” these are worrisome times. Sandwiched between the financial needs of parents and children, they often end up having to contribute to both, and there may be particular urgency when elderly parents need to get their estate plans in order. Often, parents have put off making vital decisions, and face a future of uncertain means, declining control over their own lives, and increasing dependence on younger family members.
One way to address these issues is to view estate planning as a family affair. You could start by setting aside time for everyone involved—yourself, your spouse, and any siblings—to discuss the main aspects. But be prepared for a frank, often awkward discussion of sensitive concerns. Your parents or in-laws may regard this as an intrusion into their personal affairs, and emotions are likely to run high.
You probably won’t solve everything in one meeting. Rather, it’s likely to be the beginning of a long process. At some point, too, you may want to begin talking with your children, to let them know what’s happening and to keep them up to date on your own estate planning.
Here are several things to discuss with your parents:
Do they have an up-to-date will? Most estate plans start with a will, and even if your parents have one (many don’t), it may need to be updated to reflect changes in family circumstances, your parents’ desires about how assets will be distributed, and frequent recent shifts in tax and estate laws. There could be new grandchildren to account for, or a divorce. You’ll need the help of an experienced estate planning attorney, but first you’ll have to persuade your parents to share this very personal document with you. Emphasize that your only goal is to make sure their wishes are successfully carried out.
Where’s the money? A parent or in-law could have assets in many different accounts, and account information and statements may not be neatly filed in one easily accessible location. To make sure nothing is lost, you may want to take an inventory of all of the key documents. This will likely include bank account records, life and disability insurance policies, retirement plan and IRA statements, and the like. It’s a good idea to assemble all of the pertinent information, including account and policy numbers and contact names, in one document and make copies for you and your parents or in-laws. Also note whether any accounts are in joint name or designated as “transfer on death” accounts, which will not pass under the terms of a will but rather to the designated person on the account.
How are assets being managed? Pulling together account documents also provides a good opportunity to check on your relatives’ investments. Do their holdings seem appropriate given their advancing age, financial needs, and risk tolerance? If there are many similar accounts, you might want to suggest consolidating them to simplify their management.
Are tax records in order? As part of this process, look at tax issues, and determine the tax basis of securities that may have been purchased decades earlier. It’s also a good idea to know where your parents’ tax records are kept and who their accountant is.
What are their wishes about health care? This can be a particularly touchy subject, so tread carefully, but it’s also extremely important. Try to establish guidelines for what will happen if a relative is disabled or suddenly loses a spouse. If extra care is needed, do they prefer to have someone come into their home, or would they rather move into assisted-living or live with a family member? Laying the groundwork now for such major changes could help make a later transition somewhat easier. Also encourage your parents and in-laws to establish a living will and durable power of attorney that sets out their preferences for end-of-life care and specifies someone to handle health-care decisions if they’re no longer able to make them. A general power of attorney is also needed for management of assets.
This list hardly covers everything you’ll need to discuss, but it may help get you started. For affluent families, intergenerational issues are likely to be much more complex, perhaps including a variety of trust arrangements and sophisticated estate planning strategies. We can work with you and your parents to assess asset allocation plans, tax strategies, and other elements of their financial lives. And, of course, we’re also happy to help you take stock of your own estate plan and the provisions you want to make for your children.