Last week’s article described The Silver Tsunami and found Grandma Jen in a funky situation: she had become the guardian of 2 girls, Taylor, and Michelle, with insufficient resources left by their parents. This week’s article discusses Jen’s alternatives.
ONE. Jen needs to make sure that she has solid plans in place to provide for herself because if she’s not doing well Taylor and Michelle probably won’t either. These circumstances and Jen’s age, 52, require an estate plan that includes the requisite powers of attorney and a revocable living trust, naming a successor trustee who could step into her shoes were she to become incapacitated. That successor trustee, who should also be Jen’s property power of attorney agent, should be working with a highly qualified financial planner and CPA, to ensure Jen’s financial needs are met.
Under her trust, she should have at least 2 subtrusts, perhaps more, for the children, leaving Jen as Trustee and designating the financial advisor as a successor co-trustee and a trusted friend who would act as a successor co-trustee and successor guardian of the estates of the 2 children.
The trust and powers of attorney would help considerably. Yet, additional questions she must consider are complex with serious implications:
- Who should determine how much of her income should be spent on her care – the trustee, the agent under her property power of attorney, or the agent under her healthcare power of attorney?
- What if there is not enough to fund Jen’s long-term care and college education for both girls?
TWO. Let’s just say that Jen is a healthy, strong, and vibrant 52. She’s also at the younger end of the Boomer generation with at least 13 – 15 years of earning potential left. Thus she must make the best of it.
Since estate and financial planning overlap and yours truly works with a number of financial and tax professionals, a financial professional would likely tell Jen to max out her retirement plan contributions, defer taking Social Security until the payout is 100%, and be mindful of the resources needed for Taylor and Michelle for at least 7-9 years after Jen’s retirement. This is also where retirement withdrawal strategies come into play.
Let’s also say Jen stays healthy, retires comfortably, the girls graduate college but one flies back to the nest for an indeterminate period, an “Echo Birdie.” Now, in retirement, Jen has an extra adult to feed and shelter, which means she is again incurring additional daily expenses. What would happen if Taylor became seriously ill or injured? Has she done even nominal planning to safeguard her grandmother’s resources? Does Jen have insurance on Taylor? Thus while Jen and her late husband had an estate plan, Chris and Chaz didn’t, which isn’t surprising because 70% of all Americans, including Baby Boomers, haven’t planned or planned adequately for regular situations, not to mention the Silver Tsunami.
This is just yet one more example of why estate planning is critical for the 99%rs.
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The Silver Tsunami Silver Lining, Pt 1 | The Silver Tsunami Silver Lining, Pt 2
