Have you ever heard of the term Sandwich Generation? Well, these are the people that find themselves taking care of their children as well as their aging parents at the same time. In these situations, individuals have taken estate planning steps to not only include their children but also their parents in the plan. In this article we will consider different estate planning techniques for individuals who need advice in estate planning for aging parents so that those in the Sandwich Generation can find comfort knowing that they have taken the proper steps to protect all of their loved ones.
When you are trying to include aging parents in your estate plan, there are a number of complex issues that need to be considered. Here are some considerations that you might want to make.
Set up Trusts
Trusts are very flexible estate planning instruments and there are different Trust strategies that can be used to help your aging parents. For example, if you were to pass away before your parents do and they were still in need of support, you could create a provision in your trust that create a special sub-trust for their benefit. This special sub-trust could then be distributed to your children after your parents pass away.
Another options for a Trust is to create a Trust that splits into two parts at the passing on one of the spouses. The part that was split off (or Decedent’s Trust) can produce income that can be used to make payments to aging parents. If these types of Trusts are properly drafted, they can not only provide tax benefits but also eventually pass to your children without them having to pay gift or estate taxes.
Plan for Long-term Care
Long Term Care (LTC) can get very expensive. The reason it is so expensive is because it includes the cost of assisted living facilities, home healthcare or a nursing home. The expenses aren’t normally covered by health insurance or Social Security and Medicare provides very limited help. To help with this ever growing cost, you can purchase LTC insurance or put money into other investments that could provide the much needed income.
Pay Medical Expenses
If you just want to pay your parent’s medical expenses directly, you can do so without any tax consequences. The only requirement is that you pay the medical providers directly for their services.
Buy Your Parent’s Home
If your parents own a home that has a good amount of equity, you might consider buying it from them and leasing it back to them. This will allow your parents to get immediate access into their home’s equity without moving. This plan will also provide you with the ability to make tax deductions for the mortgage interest, maintenance and other expenses.
Be Thorough but Careful
As you investigate the various options available for assisting your aging parents, try not to get too extreme. If you over do it and give you parents too much for support, these assets could end up in your estate again and then be subject to gift and/or estate taxes. It is also important to keep in mind that gifts could potentially disqualify your parents from receiving federal or state government benefits that they would otherwise be entitled to.
If you are interested in speaking with a Las Vegas estate planning attorney with experience in these types of matters, please call our office at 702-910-4300 or you can click here to request a meeting time. We would be happy to provide you with a free consultation so that you can get the answers that you need.