Estate Planning for Multi-Generational Households

An estimated 50 million American households now include a child being raised by a grandparent. Even more households include multi-generational families, where 3 and 4 generations live together. Even the Whitehouse included such an arrangement, as President Obama’s own grandmother resided with his family until her death just before the 2008 election.

But with more Americans than ever raising their grandchildren, there is even more urgency for aging caregivers to consider early estate planning. Without wills, trusts, and powers of attorney, elderly grandparents may find their estates being paid to adult children who have no been a part of their lives for many years. Here are just a few ways that estate plans may be used to protect grandchildren and the grandparents who raise them.

Wills and Trusts

Without a will, the state will decide who acts as the personal representative of an estate. Sadly, there are often reasons why a senior is raising a grandchild. Perhaps the parent has been incarcerated, or the parent has simply become estranged over the years and chosen not to take care of his or her own child. Whatever the reasons, after raising a grandchild from youth to adulthood, many grandparents may prefer that their personal assets be passed to that grandchild. However, under the laws of New York, this will not happen absent a will that expressly dictates it.

Likewise, absent a will, the law determines who will serve as the representative. Therefore, if the adult child is not in the senior’s life and is not raising his or her own child, there may be grave concerns about that person acting as the person responsible for handling probate and other final affairs.

Powers of Attorney

Possibly the most dangerous of all estate planning tools to ignore, powers of attorney protect an elderly caregiver from unscrupulous family members and would-be abusers. Some seniors who are raising grandchildren may develop strong parental ties to their grandchildren – many times stronger than those formed with their own children. For this reason, they often would prefer their grandchildren to make healthcare and financial decisions for them when they are unable.

However, under most state healthcare surrogate laws, grandchildren are fairly far down the list of people who are authorized to act as a decision maker for a legally incompetent senior. Even more importantly, should an official guardianship procedure be needed in order to select a court-appointed guardian, grandchildren may find it very difficult to overcome the presumption that their grandparent’s adult children should be passed over in favor of a grandchild. Therefore, estranged and often less than worthy individuals may gain complete access to a senior’s life savings and healthcare decision-making authority, despite the senior’s clear wishes. A simple power of attorney can clear this up and give the appropriate powers to the person desired for those roles. Therefore, multi-generational households have a number of extra considerations that make estate planning critical.

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