Stuck in the Middle: Handling Your Parent's Estate and Protecting Your Own
Are you one of the 20 million who are becoming known as the Sandwich Generation? This is the generation of adults who are caring for their elderly parents while at the same time raising young children.
If you are among this group you know the difficulties involved with managing your time, energy and stress level while taking care of everyone else's needs. It's a difficult job to ensure that your parents are managing their financial affairs and getting the medical care they need while you are also ensuring that your children grow up with the love and attention that they need.
As caretakers we often feel that we have to do everything ourselves. But I want you to remember that you don't have to do this alone. Reach out to your family and friends. They know how hard you work to support everyone around you and they will be happy to help. And don't forget that there are professionals out there who can help you manage the load too.
You can start by establishing relationships with the right kinds of professional advisors who will help you get your parent's financial, legal, and insurance affairs in order.
Here's how you can get started:
1) Get the Entire Financial Picture: Your parents may have always been open with you about their finances and if this is the case, this step should be easy for you. If not, now is the time to make a change. You need to know exactly how your parents are doing financially and whether they have a financial plan in place in case they become ill or suffer a long-term disability.
Seek out the help of a financial advisor. This can be a financial planner, a CPA, or even a savvy bookkeeper. The key is to find an advisor who is going to guide you and your parents to make the right financial decisions, not just file your taxes.
2) Get An Estate Plan in Place: It is vital to have your parent's estate plan in place. At a bare minimum they need to have a financial power of attorney and health care directives in place to allow someone to make the financial and medical decisions they are unable to if they become incapacitated. In addition they need a will to direct where they want their assets to go when they are gone. And if they have significant assets and want to avoid the time and cost of probate and minimize the estate taxes they will have to pay they should also have a trust.
You MUST get the assistance of an attorney for this step. And I'm not just saying that because I am one. Your legal advisor should be a lawyer who can give you and your parents legal guidance throughout the planning process and throughout their lifetime, not one who just drafts documents. It's important to work with a client-centered and service-oriented attorney who takes the time to get to know you and your family and creates a lifelong relationship. You should work with an attorney that you like and trust and who will be there for you throughout your parent's lifetime to help keep their plan updated and, even more importantly, who will be there to help when your family needs it most.
3) Get Insurance: Once you've gotten all of your parent's financial facts, you can examine whether your parents have the savings to cover the costs of a nursing home stay, assisted-living facility, or extended home care services. If they don't, it is time to examine long-term-care insurance. Don't make the mistake of taking money out of your own retirement savings or kid's college fund. There are government programs to assist your parents with long-term care, but not to take care of you if you end up penniless in retirement. And this is why long-term insurance is often a good idea.
Establish a relationship with an insurance professional who will answer all of your questions and will guide you through the insurance process and find a plan that is right for you family. And make sure that someone will be there to assist you and answer you questions when it comes time to use that insurance.