When children are growing up, their parents play a critical role in their development. When parents are growing old, adult children are likely to play a crucial role in caring for their parents. This reversal of roles can be challenging, and will only be successful when both parties understand their roles and have similar expectations. According to Fidelity Investment's Family & Finance report, parents and children don't always see eye-to-eye in these matters. This survey asked parents and children questions about financial support, estate planning, retirement income, elder care and other issues. It found that 40% of families are not in agreement about these important issues.
One of the biggest concerns many people have about growing older is spending the assets they earned over a lifetime to pay for nursing home care. The cost of nursing home care is astronomical. According to the New Jersey Department of Human Services, the average daily cost of nursing home care was approximately $330 a day in 2015. These costs can drain decades' worth of savings in a relatively short period of time.
A recent study on middle income boomers by Bankers Life and Casualty Company showed that while members of this age group generally have a financial plan in place for their final life expenses, they are largely unprepared for any future that may require nursing home planning or Medicaid planning. Many, aside from plans for their final expenses, simply have plans to retire based on their financial situations.
With the recent passage of the American Taxpayer Relief Act of 2012, more widely known as the fiscal cliff deal, big changes have come to the estate planning world. As we noted in a recent set of posts on the issue, the law makes the 2010 exemption system permanent, removing the uncertainty that has surrounded the issue for years. Taxpayers will indefinitely be able to plan on a $5 million exemption amount, with yearly adjustments for inflation.