The “sandwich generation” accounts for a large segment of the population. These are people who find themselves caring for both their children and their parents at the same time. In some cases, this includes providing parents with financial support. As a result, estate planning — which traditionally focuses on providing for one’s children — has expanded in many cases to include aging parents as well.

Including your parents as beneficiaries of your estate plan raises a number of complex issues. Here are five tips to consider:

  1.     Plan for long-term care (LTC). The annual cost of LTC can reach well into six figures. These expenses aren’t covered by traditional health insurance policies or Medicare. To prevent LTC expenses from devouring your parents’ resources, work with them to develop a plan for funding their health care needs through LTC insurance or other investments.
  2.     Make gifts. One of the simplest ways to help your parents financially is to make cash gifts to them. If gift and estate taxes are a concern, you can take advantage of the annual gift tax exclusion, which allows you to give each parent up to $15,000 per year (as of 2018) without triggering taxes or the necessity of filing a U.S. Gift Tax Return..
  3.     Pay medical expenses. You can pay an unlimited amount of medical expenses on your parents’ behalf, without tax consequences, so long as you make the payments directly to medical providers.
  4.     Set up trusts. There are many trust-based strategies you can use to financially assist your parents. For example, in the event you predecease your parents, your estate plan might establish a trust for their benefit, with any remaining assets passing to your children when your parents die.
  5.     Buy your parents’ home. If your parents have built up significant equity in their home, consider buying it and leasing it back to them. This arrangement allows your parents to tap their home equity without moving out while providing you with valuable tax deductions for mortgage interest, depreciation, maintenance and other expenses. To avoid negative tax consequences, be sure to pay a fair price for the home (supported by a qualified appraisal) and charge your parents fair-market rent.

As you review these and other options for providing financial assistance to your aging parents, try not to overdo it. If you give your parents too much, these assets could end up back in your estate and potentially exposed to gift or estate taxes. Also, keep in mind that some gifts could disqualify your parents from certain federal or state government benefits. Contact us for additional details.


Gifting assets to loved ones (family or friends) is one of the simplest ways of reducing your taxable estate. In the memorable words of the well-known author, Philip Roth, “It's best to give while your hand is still warm.”  However, what may not be as simple is determining whether you need to file a gift tax return (Form 709). With the April 17 filing deadline approaching, now is the time to make that determination.


A federal gift tax return (Form 709) is required if you:

  •            Made gifts of present interests — such as an outright gift of cash, marketable securities, real estate or payment of expenses other than qualifying educational or medical expenses (see below) — if the total of all gifts to any one person exceeded the $14,000 annual exclusion amount (for 2017),
  •            Made split gifts with your spouse,
  •            Made gifts of present interests to a noncitizen spouse who otherwise would qualify for the marital deduction, if the total exceeded the $149,000 noncitizen spouse annual exclusion amount (for 2017),
  •            Made gifts of future interests — such as certain gifts in trust and certain unmarketable securities — in any amount, or
  •            Contributed to a 529 plan and elected to accelerate future annual exclusion amounts (up to five years’ worth) into the current year.


No gift tax return is required if you:

  •            Paid qualifying educational or medical expenses on behalf of someone else directly to an educational institution or health care provider,
  •            Made gifts of present interests that fell within the annual exclusion amount,
  •            Made outright gifts to a spouse who’s a U.S. citizen, in any amount, including gifts to marital trusts that meet certain requirements, or
  •            Made charitable gifts and aren’t otherwise required to file Form 709 — if a return is otherwise required, charitable gifts should also be reported.

If you made a gift or gifts of hard-to-value property, such as artwork, collectibles, or interests in a family-owned business, consider filing a gift tax return even if you’re not required to. Adequate disclosure of the transfer in a return triggers the statute of limitations, generally preventing the IRS from challenging your valuation more than three years after you file.

In some cases it’s even advisable to file Form 709 to report nongifts. For example, suppose you sold assets to a family member or a trust. Again, filing a return triggers the statute of limitations and prevents the IRS from claiming, more than three years after you file the return, that the assets were undervalued and, therefore, partially taxable.

Contact us if you made gifts last year and are unsure if you should file a gift tax return.



Most estate plans focus primarily on what happens after you die. However, without arrangements for what will happen in the event you become mentally or physically incapacitated, your plan is incomplete. If an accident, illness or other circumstances render you unable to make financial or health care decisions — and you don’t have documents in place to specify how these decisions will be made, and by whom — it is likely that a court-appointed guardian and/or conservator will have to be appointed to act on your behalf.


There are several tools you can use to ensure that a person you choose handles your affairs in the event you cannot:

Revocable trust. Sometimes called a “living trust,” it’s designed to hold all or most of your assets. As an initial trustee, you retain control over your own assets, but in the event you become incapacitated, your designed successor can will take over and administer the trust for and on your behalf.

Durable power of attorney. This authorizes your designee to manage your property and finances, subject to limitations you establish. It should be noted that a Durable Power of Attorney is valid during a period of your incapacity or disability. But, following your death, the designee under a Durable Power of Attorney is no longer authorized to act on your behalf

Living will. It expresses your preferences regarding life-sustaining medical treatment in the event you’re unable to communicate your wishes. Certain states have specific statutes recognizing Living Wills, Michigan does not.

Health care power of attorney. Sometimes referred to as a “durable medical power of attorney,”  “health care proxy,” or "designation of patient advocate'" this document authorizes your designee or advocate to make medical decisions for you in the event you can’t make or communicate them yourself.

HIPAA authorization. Even with a valid health care power of attorney, some medical providers may refuse to release medical information — even to a spouse or child — citing privacy restrictions in the Health Insurance Portability and Accountability Act of 1996 (HIPAA). So, it’s a good idea to sign a HIPAA authorization allowing providers to release medical information to your designee.

For these tools to be effective, you must plan ahead. If you wait until they’re needed, a court may find that you lack the requisite capacity to execute them. Also, be sure to check the law in your state. In some states, certain planning tools are not permitted, or go by different names. We can help you address incapacity in your estate plan.