Navigating the Sandwich Generation: Estate Planning for Today and Tomorrow

The "Sandwich Generation" refers to today's Americans who find themselves in the dual role of caring for their aging parents while also attending to the needs of their own children. Aging parents may be dealing with illness, requiring assistance with daily tasks, or in need of financial support. Simultaneously, children may depend on caregivers for a mix of financial, emotional, and physical assistance. Caregivers, caught between these responsibilities, are metaphorically "sandwiched." The term has become widely recognized, earning a place in the Merriam-Webster dictionary in 2006.

Challenges Affecting the Sandwich Generation

If you feel the weight of caring for two generations, you're not imagining things. Research from The Pew Center for Research studies have shown alarming impacts on individuals in the Sandwich Generation. Financially, caregivers spend an average of $10,000 annually on both parents and children combined. The COVID-19 pandemic only heightened the financial strain, with caregiving expenses doubling and 52 percent of young Americans living with their parents.

Planning for retirement becomes an additional concern, with many feeling financially squeezed and uncertain about their future.

Estate Planning: Your Shield Against the Squeeze

Estate planning is the process through which you can best protect yourself and your loved ones, and it’s becoming increasingly critical to prepare right away. While government support may offer relief, creating a proactive action plan through estate planning is your best bet.

Here are some estate planning tips to navigate the unique demands of the Sandwich Generation:

Plan for Long-term Care:

Work with your parents to secure long-term care insurance and other investments to cover future needs. Calling long-term care expensive is an understatement. In most cases, it can creep up into six figures and often isn’t covered by Medicare or health insurance. 

Make Cash Gifts:

Strategically support your parents or grandparents through cash gifts, taking advantage of gift and estate tax exclusions. 

Contribute to a Retirement Account:

Establish a tax-advantaged retirement account early on to secure your financial independence in the future. You should be thinking about your own retirement as early in your life as possible. Set up a tax-advantaged retirement account and build up a nest egg so that you can be financially independent when you retire one day. That way, your own children or grandchildren won’t face the same financial burden that you currently face.

Set up Family Trusts:

Design a trust to benefit both parents and children, ensuring financial stability in case of unforeseen circumstances.

Consider Buying Parents' Home:

By buying your parents’ home and leasing it back to them, you’ll give them equity so that they can support themselves financially without having to move out. This arrangement will help you build equity in the long-run and take advantage of valuable tax deductions.

Financial & Medical Power of Attorney:

Work with your parents to appoint you as their financial and medical Power of Attorney for efficient decision-making.  This is so important because if they do not do this while they have capacity and there comes a time when they are no longer able to make decisions or care for themselves, you will need to petition a Court for “guardianship” over them which can become quite costly with all the legal fees involves, can be very invasive with court appointed evaluators and social workers coming into their home, and can delay getting them services or support they  need until the court process is resolved.  

Obtain a HIPAA Authorization:

Have your parents sign a HIPAA authorization. This will allow your parents’ medical team to provide you with sensitive medical information that would otherwise be kept confidential. As their medical POA, you’ll need this information in order to make decisions.

Set up a Tuition or Childcare Fund:

Start early by creating a fund for future childcare expenses, whether for your own children or other financial goals. The cost of childcare alone can be as much as your rent check in some areas. This creates a burden and conundrum for many new parents, especially when grandma or grandpa cannot be a source of support when requiring care themselves. 

These strategies are just the tip of the iceberg. Estate planning offers a myriad of options tailored to your unique circumstances, ensuring you're well-prepared for the challenges that lie ahead.

Key Takeaway: Early Preparation is the Key

As Eleanor Roosevelt wisely noted, "learn from the mistakes of others." The current Sandwich Generation may not have predicted the challenges they face, but we can learn from their experiences. Early preparation through estate planning is the key to sowing seeds of security and stability for yourself and your loved ones.

If you're ready to embark on the journey of establishing your Estate Plan, our team of professionals at the Law Offices of Leslie Sultan is here to guide you every step of the way. Don't wait; start the conversation today and secure a more confident tomorrow.

About the Author

Leslie has been practicing law since 2009 and is the host of the estate planning podcast 'Legacy Purse'. She has a long history of representing family members struggling to inherit property and/or wealth from deceased family members through the Probate Courts. Knowing how time-consuming and expensive the probate process is, Leslie takes great pride in helping her clients learn how to plan and protect their families during their lives so they can avoid the probate court process and save their loved ones that additional grief (and expense).