For the ‘sandwich generation,’ the meat is the paperwork

The “sandwich generation” is typically defined as parents in the age range of 40 to 60.

This typically is the stressed-out group of folks caring for both growing children and aging parents. It’s a lot.

But there’s good news — there are ways to make these obligations easier, and there could be something in it for you, too, besides good karma.

The need for agreement

With minor children, it’s clear that the parent(s) is in charge. With aging parents, if there is more than one child, determining responsibilities can be difficult. Don’t wait until there is an emergency to discuss with your parents and your siblings who will be responsible for what. Your parents likely will want to remain independent as long as possible.

But at some point, it may be wise to have someone else with authority to act as well. And in the event of incapacity, where will your parents live? Who is paying for what? Who will make health care decisions? Who will make financial decisions?

Unfortunately, I have too often seen battles between siblings. Sibling One rushes mom or dad off to an attorney to have themselves named as trustee and power of attorney or added to bank accounts.

Then along comes Sibling Two and they take mom or dad to yet another attorney for the same documents. They each may have believed they were acting in the best interest of the parent. However, such actions confuse the parent, can sometimes cause irreparable harm to the siblings’ relationship, and can result in a conservatorship of the parent — much more costly and time-consuming than honest and open conversations when mom or dad still has the capacity.

Have the conversation. And get the documents in place.

Once again, it’s the documents

As I mentioned in my last column, when your child turns 18, they are a legal adult. That means you no longer have the right to make decisions for them, nor can you obtain information about them from third parties (schools, hospitals, banks). This can come as a shock to parents, especially in an emergency.

The loss of a parent’s sharp decision-making skills can be equally difficult for you and your parent, who has until this point, made their own decisions, and once even made decisions for you.

Talk to your parents about their finances, future plans, and care. Make sure they have the necessary documents in place, and lead by example — you get yours in place, and make sure any child of yours 18 or older also has them in place. If your parents know everyone is doing it, they may feel less like they’re losing control.

Advance health care directive

First, every adult needs an advance health care directive (also known as a health care power of attorney) and HIPAA form.

If you, your adult child, and/or your parent reside in California, use the California statutory form (last updated in 2019).  The form needs either two witnesses who are not named in the document (and at least one of whom is not related) or a notary.

The advance health care directive authorizes a named agent to make health care decisions for the principal when they are unable to do so. It also provides some guidance for the types of decisions the principal would like made. The agent named is also the party who has authority for post-death matters (autopsy, organ donations, funeral home selection, cremation, etc.).

A HIPAA form allows a party to designate third parties with whom medical personnel can communicate. This can be extremely important as a parent ages. Being able to speak directly to healthcare providers may help you understand sooner, rather than later if health or capacity issues arise.

Furthermore, if your child or parent is hospitalized in an emergency, you’ll be able to get the information you need with a HIPAA form.

Durable power of attorney.

As with your adult children, in addition to the health care directive, have your parent sign a durable power of attorney authorizing you (or a sibling, or another responsible party, as agreed upon) to make decisions and act on their behalf in the event of their incapacity or by their choice. With a properly executed and activated power of attorney, the agent designated will be able to access bank accounts, pay bills, and handle insurance claims and legal matters, among other things, on behalf of your parent.

The power of attorney does not take any rights away from your parent—and that may be important for them (and you) to hear. A power of attorney merely allows the agent to act on their behalf as well.

This can be important to monitor bank accounts for unusual spending, forgetting to pay or double-paying bills, and out-and-out fraud. Senior citizens are all too frequently the victims of scams. A regular review of bank accounts can catch fraud earlier.

Estate planning documents

Do your parents have their estate planning documents in place? At a minimum, there should be a will stating who is to act as executor and how they wish their estate to be distributed. If they have assets in excess of $184,500 without co-owners, beneficiaries, or “payable on death” designations, a probate will be required unless there is a trust. Probate is a long and expensive process in California and is generally something to avoid.

But do not rush to add your name to your parents’ accounts or deeds, even with the good intention of sharing it with your siblings. There are potential gift and property tax consequences involved that should be discussed with an attorney.

Instead, a living trust should be considered if your parent still has the mental capacity to do so. The trust will also specify who is to become the trustee in the event of your parent’s incapacity. If your parent utilizes a trust to transfer assets at death to their children, they may be able to provide you with some asset protection, including protection from future ex-spouses, by leaving the assets to you in a trust that does not distribute outright but instead gives you specific control and benefits.

This is not a “do it yourself online” trust, however, so please see an attorney.

Note: If your parents have estate planning documents in place, but they are more than five years old, have them updated. Forms and laws may have changed, but it’s also a good idea to have documents reflecting their current wishes. If your parents are married, and their trust was done before 2012, definitely have it reviewed. There was a major tax law change in 2012 that means older trusts might be much more complicated than is now necessary.

Review your documents

Did you name other people (your own parents, perhaps) as successor trustees of your trust or power of attorney for you? Are they named as the guardian of your minor children? Does that still make sense?

Every adult — kids over 18, you, mom and dad — should have an advance health care directive, HIPAA form, and durable power of attorney in place. An adult with assets of any kind should have a will and likely a trust.

You’ve got responsibility for your children and your parents, so why not make it easier on yourself by planning ahead?

Teresa J. Rhyne is an attorney practicing in estate planning and trust administration in Riverside and Paso Robles, CA. She is also the #1 New York Times bestselling author of “The Dog Lived (and So Will I)” and “Poppy in The Wild.”  You can reach her at Teresa@trlawgroup.net