for release October 5, 2001
The Sandwich Generation . . . Helping Your Aging Parents
by Carol Abaya, M.A.
Are you juggling doing errands for your aging parents, your children, yourself and working at the same time? Are you tired, stressed out and upset that your once vibrant parent is now frail and needy?
Do you feel alone? Rest assured you are not alone! The Sandwich Generation is dedicated to the 50 million Americans who may have elder/parent care concerns and/or responsibilities.
NOTE TO EDITORS: this is the 2nd of a 3-part series on finances.
TRUSTS OFTEN DO NOTHING BENEFICIAL
Question: We (75 and 73) just attended a financial planning seminar. They talked about living trusts and how great they are; how they save taxes and avoid guardianship. We're confused!
Answer: I'm personally against living trusts. Often they create serious problems and solve nothing.
There are two kinds: revocable and irrevocable. Revocable are just that. You can change them. You control the assets in the trust. But then a lot of paperwork and sometimes expenses are involved. You have to transfer ownership (paperwork) from yourself to the trust. If you want to revoke it, ownership again has to be changed. And when you die, ownership is again changed.
Irrevocable living trusts cannot be changed during your lifetime. You completely lose control of the assets and maybe even the income! I don't know about you, but I want to control my own assets.
Most importantly, revocable living trusts (the kind financial planners are pushing) do not save even one cent in taxes. Every penny is accountable for IRS purposes.
Nor do trusts avoid guardianship. If there is an alternate trustee, there MUST be some sort of legal procedure. An alternate trustee cannot just take over. There is a trigger event, which is usually mental incompetency.
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Question: We're hearing a lot about revocable living trusts to avoid probate. We're told probate is very expensive and it takes a long time before heirs get their money. My parents, 82 and 80, have about $250,000 and a house worth about $175,000. We're all getting scared.
Answer: Unfortunately, you're not alone. Too many lawyers and financial planners are scaring people into setting up trusts. Most often they do no good.
Your parents don't have enough to worry about federal taxes. Any asset owned jointly with right of survivorship does not go through probate.
Your parents probably have most assets owned jointly, with right of survivorship. Most house deeds are so worded. So, the survivor automatically gets the house - no probate, no taxes. Any bank accounts, stocks or investments that are owned jointly also automatically pass on to the survivor - no probate, no taxes.
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Question: My husband (76) and I (75) each want to leave each of our four grandchildren $5,000. This is stated in our Wills. However, a friend of ours says the children will not get the money when we die.
Answer: The key here is how assets are owned and who gets what when the first of youy dies. If you own everything together (house, bank accounts, stocks) with right of survivorship, your grandchildren will not get any money when the first of you dies. They will each get $5,000 when the second one dies.
To ensure your grandchildren each receive $5,000 when each of you die, (total $10,000 per child) you need to have at least $20,000 in separate accounts, on one name only.
Always remember: ownership supersedes wishes stated in a will. If all assets are owned jointly there will be no money available for anyone other than the surviving spouse.
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Do you have a question? Send it in. Although letters cannot be answered individually, appropriate letters will be answered in this column whenever possible. Letters may be edited. Send letters to Ms. Carol Abaya, c/o Name\Address of YOUR newspaper (or mail direct to her at PO Box 132,Wickatunk, NJ 07765-0132) or e-mail her at SandwchGen@aol.com. Carol also has a web site: thesandwichgeneration.com.
Carol Abaya is an international-award-winning journalist and creator of the unique magazine The Sandwich Generation: You & Your Aging Parents.
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©2001 by Globe Syndicate, all rights reserved.