Here is the steady-state of many of our clients: Our clients are at the apex of their careers with massive demands on their time at work and at home. Frequently, they are managing their career and family, simultaneous with the impaired health of their parents. Perhaps their parents require additional financial assistance; maybe the more financially oriented parent has passed away. Maybe one or both parents have moved to memory care or assisted living. As our clients parent their parents, pressures often mount between siblings over the execution of this new responsibility, thus compounding life pressures. Yikes! In many instances, our clients are among the most responsible of their siblings or, occasionally, the only child. So on the one hand, our client is supporting their children through some of the most exciting times of their lives, while on the other hand, they are supporting parents through difficult life transitions. Welcome to the Sandwich Generation!
Solution? No. Partial Solution? Certainly!
This is where we step in. One of our most important goals as a firm is to serve our clients’ families multi-generationally. We want to be involved in the financial education of our clients’ children as they come into adulthood and need to start making financial decisions on their own. Likewise, we want to ensure our clients’ parents’ finances are in order and faithfully monitored. As a professional third party, we can play a strategic role in reducing sibling stress.
How about a few recent examples of how we reduce Sandwich Generation stresses
One Deceased Parent:
After the death of one of our clients’ parents, our clients step forward in many selfless ways to make sure their surviving parent is cared for. Even at the first parent’s death, a vast amount of financial consolidation must take place. If the deceased parent-owned stock and other assets, will the surviving parent get a basis step up when she inherits the account? If so, how do you make sure the step up is appropriately recorded? Should Mom sell that stock to invest in something else, or hold onto it to pass on to grandchildren? At what institutions do parents have accounts? If accounts are titled in a trust, does the title of the trust have to change and who governs her trust? Did Mom inherit retirement accounts from Dad?
The number of questions is daunting, but we can help navigate. We help our clients’ parents consolidate their accounts to one institution instead of ten. We can make sure a step-up in basis is properly recorded in accounts. While we cannot offer tax or legal counsel, we frequently have phone calls with accountants and attorneys to make sure assets are titled and accounted for properly.
One Deceased Parent – One Incapacitated Parent:
A situation that gets even more onerous for our client families is when one parent is deceased, and the other is legally incapacitated. Because our clients generally represent a highly effective and responsible group of people, they are often selected to be Power of Attorney or Trustee for their parents. This can place a significant demand on our clients’ time. We love to jump in and help our clients get organized in this situation. Again, we can help consolidate accounts to one institution. We can make sure money movement is handled effectively. We can ensure Required Minimum Distributions (RMDs) are made every year and monitor whether income is distributed from a Family Trust to the surviving parent. We continue to provide any needed income from the accounts. We typically discover that the way a previous advisor provided income by selling principal for expense needs vs our way of increasing the dividend income as much as possible reduces stress on the portfolio.
What About Siblings?
Most of our clients in these situations also have siblings to work with, and their siblings may have varying levels of motivation or interest in becoming involved. While we are not mediators, we do invite the involvement of our clients’ siblings in all of our conversations. We want all family members to be confident that their parent’s finances are handled in their best interests.
One way we keep all family members informed is through our financial model. The financial model allows us to link all financial accounts with a live feed that updates at the end of every market day. So if a parent wants all siblings to be in the information loop, they can be! There is also a cloud-based storage component to the financial model, called the Vault, where clients can upload important documents (wills, trusts, health care directives, powers of attorney, etc.), and all children will have access to these records. Transparency helps the whole family stay on the same page and feel equally involved.
The transition of our clients’ parents is one of the most stressful situations our clients face. Not only is it emotionally challenging, but it can be logistically overwhelming. Nevertheless, we encourage our clients to utilize our services for their parents because we are committed to serving the entire family. The best way to assist a client in achieving optimal human flourishing is to be committed to the family across multiple generations.
Stoddard Barnhill, CFP®
Sarah Leitzke, CFP®
Phillip Barnhill, CLU®