Estate planning is sometimes a relatively simple process. In other cases it can be downright complicated. The complication may come from managing a variety of complex assets, but it can also come from complication in the family itself.
Whether it is blended families, strained family relations, covetousness or indifference, there are plenty of family matters which can make the estate planning process difficult.
One increasingly common issue is caring for an elderly parent. Health care advances are allowing seniors to live longer. But health care is expensive, particularly for those with Alzheimer’s disease, a condition which also greatly impacts one’s quality of life.
The number of Americans at or above age 65 has exceeded 40 million, which is a record 13 percent of the population. That number is projected to make up 20 percent of the population by 2050. Among those 65 and older, the 85-94 age range is the fastest growing, having increase 30 percent over the last decade.
There is no doubt that elderly folks, generally speaking, having great assets to pass. In fact, over $20 trillion will be transferred to heirs nationwide over the next 50 years, constituting the largest wealth transfer in U.S. history. But only a relatively small number of individuals have money to pass on after using it to pay for retirement and health care costs in old age.
Children having responsibility to care for their parents often react negatively to seeing their inheritance go toward health care and other costs for their aging parents. Where an aging parent’s estate is not clearly divided in estate planning documents, it is common for adult children to feel they should inherit more than their siblings who did little to care for their parents.
Another issue is the temptation to take money from parents/ savings before they die, out of the expectation the money will eventually be theirs anyway. Many parents, though, choose to distribute their wealth evenly between children, regardless of which children did more or less to care for them.
One common mistake for adult children is to believe that Medicare or other retiree benefits will end up paying for their parents’ care, but the reality is that only long-term health insurance covers custodial care.
In our next post we’ll keep looking at this topic.
Source: USA Today, “With more blended families, estate planning gets ugly,” Haya El Nasser, March 15, 2012.