Investor Education | Sandwich generation: menu of estate issues

Are you caught between young children and elderly relatives?  If so, you are part of the "sandwich generation."  It can be difficult to care for loved ones as they grow older.  Plus, elderly relatives may not have adequately addressed their estate-planning needs.

The most practical approach is to set aside time for everyone involved—you, your spouse and any siblings you have—to discuss the main aspects.  Be careful: This requires a frank and honest dialogue about sensitive issues.  What's more, relatives may regard this as an intrusion.  Emotions might even boil over.

The following are five key estate-planning elements to consider.

Will: If a legally valid will has been devised, your relative's assets will generally be distributed as he or she wishes.  Have the will reviewed periodically.  An existing will can become out-dated.  It may need to be revised to reflect changes in personal circumstances or the applicable law.

Financial documents: Take an inventory of all the key documents pertaining to the relative's financial affairs.  This might include bank account records, life and disability income insurance policies, financial statements, retirement plan and IRA documents, and so on.  Make sure you assemble all the pertinent information—such as names and addresses of key contacts and policy numbers—in a protected file.  Print out a copy for the relative.

Investments: Similarly, create a clear picture of your relative's investment portfolio.  Assemble all relevant information in one place.  When possible, include records showing the tax basis of securities your relative acquired years ago.  At the same time, reexamine the relative's holdings in light of advancing age, economic conditions and risk tolerance.

Tax records: As with other financial and investment documents, you should have easy access to your parents' or in-laws' tax records.  For instance, do you know where they keep copies of their personal returns for the past few years, business filings and other tax documents?  Who has been preparing their tax returns?  It can be helpful to bring these practitioners into the loop.

Health care: This can be a particularly touchy subject, so tread carefully.  Establish guidelines in the event an elderly relative is disabled or suddenly loses a spouse.  For instance, you should determine whether your relative has a preference for home health care, a nursing home, a continuing care retirement community or some other living arrangement with a family member. Finally, a relative may adopt a "living will" or other health care directive to address end-of-life care decisions. This is just a short list of topics to discuss. Other arrangements, including trusts and sophisticated tax-favored accounts, may play a prominent role for affluent individuals.

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