If you are part of the baby boomer generation (born between 1946 and 1964), you may also find that you are a member of the sandwich generation, with responsibilities to both your parents (now or in the future) and your children. This should change the way you think about estate planning—instead of the traditional approach of how to leave assets to your children and future generations, you may also need to include providing for the previous generation (your parents).
The Key Takeaways
• Consider what would happen to your parents if they rely on you for physical and/or financial support, and something happens to you.
• Plan now for their physical and financial care in your estate plan.
You Are Not Alone
This is a widespread issue, complicated by rising health care costs, increased longevity and loss of savings due to recent bear markets and historically low interest rates. Today, one in four families has a care-giving challenge, with 45 million Americans providing care for one or more family members or friends.
Two-thirds of those currently over age 65 will need long-term care at home, adult day care, assisted living or nursing home care. But contrary to popular belief, Medicare does not cover long-term care or assisted living costs. In addition, many doctors are not taking new Medicare patients, and with Medicare and Medicaid cutting doctor reimbursements, we can expect the physician shortage to get worse, which will increase health care costs even more.
What You Need To Know
Our parents are living longer, their expenses are skyrocketing and their savings are being depleted. It should come as no surprise that they may need your help. But who will take care of them if something should happen to you?
Actions to Consider
* Set up a trust for your parents in your estate plan. Special provisions can be included that would allow them to qualify for Medicaid if needed now or in the future.
* Select someone to oversee physical care. This might be a sibling or one of your adult children. It should be someone who lives nearby and is willing to visit often, observe the care being provided, hire caregivers, select a facility or doctors, etc.
* Select a trustee to manage the funds. This might be the same person who is overseeing the physical care or a different person; not everyone has the aptitude to do both. A professional trustee is also an option.
* Purchase a life insurance policy on your life to provide the funds to pay for this care so that your other assets are not consumed. A term life policy that would extend beyond your parents’ projected life expectancy would be the most affordable.
* Assemble teams of experts now who can provide assistance and continuity in your absence:
• Professional advisors could include an elder law attorney who is familiar with government benefits (including VA, Social Security and Medicaid planning), an insurance expert, CPA, and financial planner.
• Medical advisors could include an internist or family practice doctor, along with specialists.
• Caregiving advisors could include a geriatric care manager, visiting nurses, transportation services.