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As adults, we are often faced with various slippery slopes.  We wonder if we are making the right decision regarding our children’s education?  Are we in the right career choice?  Is purchasing a new car the right thing to do right now… But, often the slippery slope that takes us most by surprise is, when we find ourselves changing roles with our parents.  Suddenly, we find ourselves feeling the need to check on our parents a little more often.  We start wanting to know a little more about their financial picture, or worse, feel the need to protect them from a family member or friend who might be taking advantage of them in some way.

If you find yourself, in what many are calling the sandwich generation (parents with minor children of their own, who find themselves in a role reversal with their own parents), there’s some important information you need to know. First, understand that it’s only natural that you want to postpone the inevitable but also understand that by planning ahead, you and your parents will be better prepared to handle whatever may occur down the road.

Almost weekly, we hear from someone in the sandwich generation. Herein lies the slippery slope.  All too frequently, the adult child calls to say that their parents have been declared unable to make the wisest choices for themselves and now they want to bring their parents or grandparents in to draw up their estate plan.

Often, the child has been proactive to a certain extent and has had their parent sign a Power of Attorney.  While a Power of Attorney can give an adult child the authority over a broad range of decisions, they generally do not provide the adult child with the authority to draft the estate plans on behalf of their parents.  To do so, would be fraught with the possibility of contesting lawsuits from other family members.

In most such cases, the adult child will need to work with an elder law attorney and petition the court for conservatorship.  Much like probate, a petition for conservatorship:

  • Makes your parent’s financial holdings public (problematic if you have someone in the family who you are concerned about and who may try to take advantage of your parent’s incapacity until the issue is settled by the courts),
  • Can be expensive (especially if contested), and
  • Can take months, even years for the process to be completed.

In the meantime, if your parent’s assets are not properly funded into a trust, they remain at risk.

Furthermore, should your parent pass away, their estate will be subject to estate taxes, which although not an issue for many during 2011 and 2012, in 2013 tax rates could return to the less favorable rates of up to 55% on estates over $1 million.

So, how can you best advise your parents or grandparents?

  • First, have that difficult conversation.  Explain what risks they are taking and possible consequences of doing nothing, or of doing the wrong thing.
  • Consult with an estate planning attorney to design an estate plan that will work the way your parents would like.  If your parents choose for you to serve in a trustee role, understand your responsibilities and know exactly what you need to do and when.
  • Be sure all their assets are properly funded to their trust and not vulnerable to creditors or third-party lawsuits.
  • Make absolutely sure that your parents all their healthcare directives in place, and have selected a disability panel made up of family, friends, perhaps their primary care physician and even their pastor, priest or rabbi, so the decision of when to ask others to step in and help, will not be made by just one person.
  • Based upon their wishes, explore options for long-term care insurance.
  • Stay in close contact with your estate planning attorney.  Make sure any changes in estate law, estate taxes or life changes (births, deaths, marriages, divorces, changes in assets) are all reflected in your parent’s estate plans.
  • Lastly, and equally important as all the legal aspects to your estate plans, capture precious moments with your parents.  Our Priceless Conversations™ are an ideal way to record family histories, stories, values, wishes and dreams in a way that will allow your family to relive those special times, even long after our parents are gone.

If you’d like to discuss planning options for you or a loved one, call our office at (919)443-3035  to register for an upcoming seminar or to schedule a Vision Meeting.

Jackie Bedard
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Attorney, Author, and Founder of Carolina Family Estate Planning
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