images (1)The Sandwich Generation:  A colorful label for the people who find themselves providing financial, emotional and physical support for both their aging parents and their children at the same time.  According to a 2013 Pew Research Center report, nearly half of adults in the sandwich generation have a parent age 65 or older and are either raising a young child or financially supporting a grown child.

What steps can they put into place to better manage the situation to better ensure they will not become financially destitute and/or have a nervous breakdown?  Here are five:

Legally Protect Yourself

Lay the legal foundation that will allow you to protect both yourself and your loved ones.  Just creating the documents isn’t enough.  Make sure they are properly executed and notarized, organized and stored in a safe place where a trusted friend (i.e. lawyer, financial planner, accountant, etc.) knows where they are and how to get to them.  Ensure you consult with an attorney to determine the best options available to your specific circumstances.

Include the following documents:

  • Durable Power of Attorney.  It is a written authorization to represent or act on another’s behalf in private affairs, business, or some other legal matter, sometimes against the wishes of the other.
  • Will or Testament.  A will is the method that many people use to transfer their assets upon their death.  It is a legal declaration by which a person names one or more persons to divide up their assets and manage their assets after their death.  Consider both how ageing parents and children will be cared for in your absence.
  • Revocable Trust.  A trust is a relationship whereby property is held by one party for the benefit of another.  The trust will hold the property for the trust’s beneficiaries, usually your ageing parents and your children.  While the trustee is given legal title to the property in the trust, it is obligated to act for the good of the beneficiaries; your loved ones.
  • Living Will and/or Healthcare Proxy.  In the event you become incapacitated, these documents allow you to appoint someone to make decisions on your behalf.  This includes both financial decisions and healthcare decisions so be sure you clearly communicate your wishes and plans to your assigned agent well in advance of finalizing the document.

Know Where the Assets Are

Sit down with your parents and discuss their financial situation.  What are their assets, debts and what they want to do in the event they become physically unable to care for themselves?  This is a difficult but critical conversation to have.  The best time to do this is when your parents are still mentally alert and cognizant of their actions.  Waiting until they show cognitive issues could possibly complicate and negate any other work you’ve done.

The first and easiest step is to follow the paper trail.  Review all the financial statements.  Including prior year tax statements and statements from banks, credit card and insurance companies, brokerages, etc.  The second step is to find all the “non-documented” assets.  This could include hard assets like gold and silver coins or bond certificates which can be purchased and stuffed into a desk drawer.  Take a look into safe deposit boxes, inventory what’s in the attic and clean out the garage.

Whose Money is It?

In talking about money, make sure you discuss whose money is being used and who makes the financial decisions.  If you are lucky enough to have parents who can make their own financial decisions, great.  But realize, at some point in time, they could become incapacitated.  Will they be able to recognize they are becoming incapacitated?  Have the discussion on how and when financial decisions will be transferred from one generation to the next.

For your children, discuss finances.  Even though you may be able to financially cover all of your child’s expenses, it is not in your best interest nor your child’s to do so.  You are tapping into your future retirement nest egg.  Giving away too much may jeopardize your financial security in retirement.  For a child, many experts suggest that grown-up children should pay their parents for a portion of the household expenses.  Otherwise, they may not grow up to be independent and able to support themselves financially.

Make Time for Yourself

No matter what you do or how much sleep you lose, you will never feel like it is enough.  Wanting to protect your loved ones is a human emotion and need.  However, this guilt is self-imposed and there is no reason to feel guilty.  Most caregiving experts insist it is critically important for caregivers to physical and mentally recharge their batteries in order to continue to be there for their family.  Go to the gym, take a walk, connect with a close friend.  Find an outlet that will allow you to escape the day to day stress at least for a little while.

Find the Right Professional  

Managing three different generations (your parents, your child’s and yours) requires a variety of professional help.

Financial Planners help you organize and plan for the future, both your future, your parents’ future and that of your children.  Good financial decision making can enhance one’s lifetime standard of living and increase the probability that everyone is taken care of financially.

Law is a part of our society and lawyers are trained to guide you through the legal process.  It can be complicated, frustrating and time-consuming.  A lawyer will save you time and money by making sure you know what your legal options are and helping you choose what options are best for you circumstances.  Estate attorneys can help with the legal documents discussed above.

Other professionals include accountants and social workers (especially if you need to plan for future parental care).

Being a member of the Sandwich Generation can be stressful and frightening.  By taking the five steps out-lined above, you will be able to retake control of your life and better manage that of your loved ones.