Estate Planning Issues Affecting the Sandwich Generation

If you're a member of the Sandwich Generation, make sure your parents and adult children have the necessary estate planning documents in place.
If you’re a member of the Sandwich Generation, make sure your parents and adult children have the necessary estate planning documents in place.

July is National Sandwich Generation Month, a time to honor those who are caring for both their children and their aging parents. This is a particularly stressful time for members of the Sandwich Generation who may not only be parenting their children but also spending the last few months homeschooling them. Older children who have lost their jobs or were unable to return to college after spring break due to the coronavirus may now be living at home. At the same time, members of the Sandwich Generation may be acting as caregivers for parents who are no longer able to look after themselves, or who are at a higher risk for contracting COVID-19.

Some of the stress of caregiving can be alleviated by making sure your aging parents and adult children have legally valid and up-to-date estate planning documents in place, and if they do not, encouraging them to have these important documents prepared. This is a relatively simple step to ensure that there will be no delays or uncertainty if you have to take action in an emergency to make medical and financial decisions for them. If they have the necessary estate planning documents in place, you will have the peace of mind in knowing that you will be able to avoid delays when you need to act quickly to preserve their safety and well-being.

What estate planning documents should you have for any person in your care?

  • A financial power of attorney – This will allow you to pay bills, manage financial accounts, file tax returns, talk to insurance companies, deal with issues related to benefits, hire a caregiver, and sell property on behalf of your parents. A financial power of attorney is also helpful in the event you need to handle financial matters on behalf of your adult child (over the age of eighteen), for example, cashing a paycheck for your child or signing a new lease on your child’s behalf.
  • A medical power of attorney – A medical power of attorney enables you to make health care decisions for your parents, if they are unable to do so themselves.  A medical power of attorney is also important for your children who are 18 or older. Once your child reaches age 18, you no longer have the authority to make medical decisions for your child.
  • A HIPAA Authorization – The Health Information Portability and Accountability Act (HIPAA) requires medical records to be kept private unless an individual consents in writing to sharing of protected health information with a named individual. If you are your parents’ caregiver, they should fill out a HIPAA authorization permitting your parents’ health care providers to keep you informed about their medical conditions and treatments. You should also keep in mind that you are not authorized to receive any medical information regarding a child of yours who is 18 or older. If your adult child wishes you to be involved in his or her health care you need a HIPAA authorization signed by the child allowing you to receive his or her medical information.

It is crucial for your parents to put these estate planning documents in place before they develop any cognitive loss that would prevent them from having the capacity to sign a legal document. If they develop dementia, for example, and are not able to understand the objective or content of a power of attorney or other document, they will be legally unable to execute the document. In that case, you will have to go to a court and ask to be appointed your parents’ guardian to manage their health care and financial affairs.

It is also important that these documents be put in place by your adult child, regardless of any health conditions, because once your child is a legal adult, you can no longer automatically act on your child’s behalf. The worst case scenario is that your adult child is unconcious or in an accident and you are unable to quickly get information from your child’s health care providers.

Members of the Sandwich Generation do not always remember to take steps to lighten their load. But one important step that can make things easier for you as a caregiver is to make sure that your parents and adult children have the necessary estate planning documents in place so that you can quickly make decisions on their behalf if you are called upon to do so.

For more information see https://galligan-law.com/everyone-needs-an-estate-plan/

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Social Security From a Divorced Spouse

A divorced spouse may be eligible to receive Social Security benefits based on a former spouse's work record.
A divorced spouse may be eligible to receive Social Security benefits based on a former spouse’s work record.

If you are divorced, there are a number of options for receiving Social Security benefits based on a former spouse’s earnings record. This is true, even if your former spouse remarries. The amount of benefits you receive won’t have an impact on the benefits to which your ex-spouse and his or her current spouse are entitled.

You can claim benefits on a former spouse’s record as long as you satisfy certain criteria. First, the marriage must have lasted 10 years or longer. You must also be unmarried at the time you claim Social Security benefits and be 62 or older. Another criterion is that the benefits based on your own employment record must be less than the benefits you’d receive based on your ex-spouse’s work record. Last, your former spouse must be entitled to Social Security retirement or disability benefits.

You can apply for benefits on your former spouse’s record, even if he or she hasn’t retired, provided you divorced at least two years before applying. If you file as a divorced spouse after your full retirement age, your benefit will be equal to half of your ex-spouse’s full retirement amount or disability benefit.

The same rules apply for a deceased former spouse.

You should know that, if you’re receiving a divorced spouse’s benefits, the general rule is that the divorced spouse’s benefits will cease if you remarry.

For more information on estate planning after a divorce see https://galligan-law.com/estate-planning-life-stages/planning-after-divorce/

Reference: nj.com (June 30, 2020) “I’m divorced. Can I get Social Security from my ex-husband?”

 

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Can Mom Leave a Home to a Child but Not Grandchildren?

You have many options on how to leave a home to your child, but not a grandchild, including a will, trust and an enhanced life estate deed.

There are numerous ways to pass your property at death. A woman with three grown daughters faced a problem about passing down the family home. She wanted to leave a home to a child who has taken care of and is closest to her. However, she also wanted to be sure that, if something happened to this youngest daughter, the house would go to her two other daughters and not the close daughter’s adult children.

With proper planning, this can be done, as described in the article “Mom needs contingency plan to pass house title” from mySanAntonio.

One way is to rely on a last will and testament. The will would state that she leaves the house to the youngest daughter, under terms of a testamentary trust inside the will. The executor would probate the will and the trust would be established at death.  The trust terms would permit the daughter to use, enjoy, and live in the house during her lifetime, as the beneficiary of the testamentary trust.

The two older daughters would be named as the secondary beneficiaries of the trust. When the younger daughter dies, the trust distributes the house to the older daughters.  The trust would also provide what would happen to the property if the older daughters are deceased.

The plan will need to be prepared by a qualified estate planning attorney. This is not a terrible process, if the will is professionally written and properly executed, includes an executor and a trustee and clear instructions about her wishes.

However, there are other options, which can also be used in conjunction.  One is an enhanced life estate deed and another is a living trust. The enhanced life estate deed specifies that the woman is retaining a life estate, that is, the right to use, enjoy and occupy her home, for the rest of her life. The document specifies that when she dies, the home goes to her youngest daughter. The owner would also want to specify that she has the right to change her mind at any time.

This approach avoids probate. However, there is a downside. If the youngest daughter dies before the mother, then the mother will need to take legal action to cancel the deed and issue a new one to the two older daughters. If the daughter outlives her mother, once she inherits the house, there will be no way to have it transferred to the other sisters in the future (unless the daughter choses to do so) and presumably the property will go to the grandchildren after all.  Clients who try to construct their own estate plans often fall into this trap, they try to rely on beneficiary designations for everything and can’t address contingencies.

A living trust provides the detailed control allowed in a will, but the trust, which must be properly created and funded, avoids going to probate. The trust would let the mother live in the home, and when she dies, the title to the house stays in trust with her youngest daughter, who is able to live in the house. However, she never becomes the owner of the house. The trust would continue to own the house. The trust would specify that when the daughter dies, the house goes to the two older daughters. She may also use the enhanced life estate deed, and have it name the trust as beneficiary at her death to ensure it goes to the right beneficiaries.

There are other considerations which affect these decisions, such as taxes, who to put in charge of the process and long term care planning.  See here for more information.  https://galligan-law.com/removing-your-house-from-your-trust/

If you have a similar situation and want to learn more, call our office today.  We will walk you through these issues and help craft a plan that accomplishes your goals.

Reference: mySanAntonio (June 8, 2020) “Mom needs contingency plan to pass house title”

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