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Estate Planning for Sandwiched Boomers

Clients' parents and children should be part of the process, too.

Helen Modly, 09/09/2010

The baby boomers have been saddled with many monikers, and one of them is the "sandwich generation." This describes the challenge of caring for elderly parents at the same time that teenage and young adult children demand time and resources. Don't focus your services just on the ham and cheese in the middle of the sandwich--the slices of bread on both sides are important, too.

When you throw out the idea of multigenerational planning, what comes to mind for most advisors involves estate-planning techniques, such as stretch IRAs or dynasty trusts. We see multigenerational planning as an opportunity to engage our clients in discussions about how they perceive their roles in helping their parents through their waning years, and what values and lessons they want to pass on to their children. These issues are relevant to all clients, not just those in the super-wealthy category.

Helping With Mom and Dad
We have had several clients come to us to help them deal with financial issues raised by their parents. As Mom and Dad get older, they turn to their children to assist them with tasks they can no longer manage. Often, our clients come in with investment questions raised by the parents, and we have saved more than one 85-year-old from purchasing inappropriate investment products. Once we establish a relationship with the parents, they are happy to turn over the responsibility to us to manage their accounts, especially knowing that we work with their children.

We have a policy in our office that allows us to aggregate family accounts to make sure our minimums are met. When a parent has an investment portfolio that normally would be less than our minimum, we are willing to take over management of it based on the fact that we have the other family accounts.

Frequently, Mom and Dad are having more than just financial problems, and our clients are faced with housing and medical decisions relating to their parents' declining health. We are currently creating relationships with elder care specialists--attorneys, geriatric care managers, daily money managers, senior move managers--so that we can support our clients when these issues arise.

Family Estate Planning
Once the parents become clients, we discuss their estate plans with them, without their children present. We have found that members of the World War II generation are often reluctant to reveal all of their financial assets to their children, but we encourage them to do so, using us as facilitators for the discussion. We can then help them craft an estate plan that is clearly understood by both generations.

If the baby boomer clients have been very successful in their careers, it is possible that they are facing estate-tax problems of their own. Knowing that, we can suggest that their parents consider leaving some or all of their assets to the grandchildren, either outright or in a generation-skipping transfer trust. Depending on the various family members involved and the size and complexity of the estate, we can recommend ways that they can direct their assets to meet everyone's needs.

One of the advantages of preparing the estate plan for the parents is that it often gives us the opportunity to meet their other boomer-age children. What better way to be introduced to potential clients than through trusted family members?

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