Wealth, Family, and Legacy: A Guide for High-Net-Worth Individuals in the Sandwich Generation

Published on July 10, 2024 | LPL Financial

Wealth and estate planning are vital for all individuals but are particularly essential for high-net-worth (HNW) individuals in the sandwich generation. “Sandwich generation” refers to individuals caring for their aging parents and children simultaneously. Not only do these individuals have to consider their wealth management, but they also must plan how their assets will be distributed among their family members if they die while caring for others.

This guide outlines seven critical wealth and estate planning considerations for HNW individuals in the sandwich generation.

Tax management

Tax management should be a priority for HNW individuals. This may involve utilizing strategies such as trusts, which can provide tax benefits while managing investment portfolios or tax-loss harvesting. HNW individuals must work with financial and tax professionals who understand their situation and how taxes may impact their unique family.

Estate planning

HNW individuals need to work with legal professionals specializing in estate planning for HNW individuals and their extended families. In working with the sandwich generation, these legal professionals will devise tailored strategies to preserve inter-generational family wealth and establish an estate plan that aligns with your personal goals and seeks to optimize your estate tax liability.

Long-term care

Long-term care planning for aging parents is another crucial aspect, including the cost of nursing homes, assisted living facilities, or in-home care. Furthermore, HNW individuals in the sandwich generation must consider purchasing long-term care insurance. Prudent long-term care planning can help family members prepare to care for grandparents, parents, and extended family members who may rely on the HNW individual monetarily.

Education planning

Subsequently, education planning for children is an area that cannot be overlooked. HNW individuals in the sandwich generation often aim to fund their children’s education. However, this requires careful planning to ensure it doesn’t significantly impact retirement savings. HNW individuals should consider setting up an education trust or a 529 plan, which offers tax advantages for education savings.

Legal documents

Next, HNW individuals need to have specific legal documents in place. A will outlines how assets will be distributed upon death, while a medical directive specifies your wishes regarding medical treatment if you become incapacitated. For NHW individuals, it’s also necessary to consider other documents to help avoid potential disputes that may arise over other family member’s care. Legal documents help prevent unnecessary family disputes or legal battles.

Retirement savings planning

Lastly, retirement savings planning is vital. While caring for parents and children, one must remember one’s future financial needs. Ensuring that your retirement savings and investments are suitable to maintain independence is essential. Working with a financial professional to develop a retirement savings plan can provide a roadmap to help you stay on track with your goals, preserve your assets, and work toward a steady income stream in retirement.

Legacy planning

Legacy planning is a comprehensive approach to managing wealth and ensuring that it provides maximum benefits for other generations or causes. It’s more than just estate planning; it involves a detailed strategy that considers your assets and beneficiaries and how to use your wealth to impact others positively.

In closing, wealth and estate planning is a complex process that demands time, thought, and professional guidance. For HNW individuals in the sandwich generation, strategic approaches tailored to their circumstances become even more critical. With careful consideration and planning, navigating the challenges of caring for parents and children and preserving assets is possible.

Important Disclosures:

This material was created for educational and informational purposes only and is not intended as tax, legal or investment advice. If you are seeking tax, legal or investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.

This article was prepared by Fresh Finance.

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Sources:

https://www.investopedia.com/terms/s/sandwichgeneration.asp
https://www.discover.com/online-banking/banking-topics/budgeting-tips-for-the-sandwich-generation/