Serving Estate Planning to the Sandwich Generation

Advance Directives

The “Sandwich Generation”—today’s 10 million baby boomers who care for both their own children or grandchildren and elderly parents or relatives—may need to take a different approach to estate planning. New research shows approximately 15% of baby boomers contribute financially to care and living expenses for their elderly family members. The average life expectancy is only going up and many seniors will outlive their savings. When caring for aging parents, particularly when it includes financial contributions, estate planning should include consideration of the parents’ eligibility for Medicaid long-term care coverage. Veterans benefits, the caregivers’ access to medical records, the caregivers’ authority to make medical and financial decisions for the parents, and possibly guardianship.

If an elderly relative is still independent but struggles financially, family members who provide financial assistance may want to explore creating a trust for the elderly relative. Gifting may initially seem attractive, with a $14,000 annual exemption, but gifts to seniors may make them ineligible for certain benefits. There are unique ways to structure trusts for families who are caring for aging relatives that facilitate asset transfers to older generations. An estate planning attorney can advise how best to create a trust that will minimize taxes for all parties involved, and to preserve eligibility for benefits that may be available to help the parent with long-term care costs.

Another trust that may help families plan to cover the costs of long-term care for aging loved ones is a Medicaid Trust. A Medicaid Trust is generally created by the parent or parents, rather than the caregiver child. After five years, a Medicaid Trust can protect assets while allowing the trust maker to remain eligible for Medicaid benefits.

It’s important for seniors who rely on family members to grant such family members access to medical records and to complete advance directives, such as financial powers of attorney, health care powers of attorney and living wills. Advance directives in North Carolina allow a person to state whom they entrust with the authority to make financial or medical decisions for them.

Who will care for children and elderly relatives if the caregiving family members become incapacitated and can no longer care for them? An up-to-date estate plan with people designated to take over such caregiving and decision-making roles gives families great peace of mind. In many instances, having a good estate plan can avoid having to rely on the court to appoint individuals for these roles. Alternatively, North Carolina guardianship law provides a court process for appointing person(s) with authority to make decisions regarding a minor’s or incapacitated adult’s personal care, finances, or both. The guardian’s role may involve managing a minor’s inheritance, making important medical decisions for the minor or incapacitated adult, or deciding where the minor or incapacitated adult will live, among other things. Even where a guardianship proceeding is unavoidable, estate planning documents can inform the court regarding one’s wishes for whom to appoint to these roles.

While caring for aging parents, families may still feel pressure to contribute to their children’s college fund. 529 plans and other savings options have tax benefits, which may make it easier to manage alternative finances for elder care.

Today, 1 in 4 families are caring for both young children and the elderly. With baby boomers distracted by the planning and care for children and elderly relatives, their own retirement and long-term planning needs are often neglected. The importance of comprehensive estate planning is greater than ever before, and plans need to address retirement for multiple generations. Comprehensive estate planning will help give peace of mind to old, young, and those “sandwiched” in between.

Address: 1414 Raleigh Rd Ste 203, Chapel Hill NC 27517
Phone: 919.636.0950 | Toll Free: 800.201.0413 | Fax: 919.493.6355 |