Do you feel like you’re pulled between the pressing needs of your elderly parents and your own children? If so, you’re part of the “sandwich generation,” the term coined to describe Baby Boomers who are often stuck in the middle. This position can lead to frustration, anguish and even financial loss.
But the worst thing you can do is panic. By adopting a plan of action, you can ease some of the pressure and ensure that the most critical issues are addressed. Although there’ll likely be some bumps and bruises along the way, this should provide more peace of mind than you would have otherwise enjoyed.
A meeting of the minds
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.
In all probability, you won’t be able to accomplish all of 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 your professional estate planner. Take as much time as you need to work things out.
Pieces of the puzzle
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:
Will. 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.
Living will. A living will spells out your parents’ desires relating to life-sustaining measures in the event of a terminal illness. It says 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.
Open lines of communication
Remember that communication is a two-way street. Talk to your parents directly and listen carefully to how they respond. In addition, build some flexibility into your plan so that the family can react quickly to health changes and other events. Contact your estate planning advisor for additional planning techniques if you are a member of the sandwich generation.
Sidebar: Don’t forget about your needs
As part of the sandwich generation, the obstacles you face may overwhelm you, especially if you have elderly parents who require financial or health care assistance. It’s easy to lose sight of yourself.
Stay focused on your own needs. Are you saving enough for your children’s college education and your own retirement? Do you have a will and power of attorney in place for you and your spouse? What about other estate planning devices? Try to make things easier for your children so they might avoid some of the turmoil that you’re going through.
