[IMGCAP(1)]For much of financial planning’s 40-plus-year tenure as a bona fide profession, little attention was given to the clients’ family unless the family was wealthy and had a family office or law firm working on intergenerational issues. Today, however, the planner who doesn’t consider the impact of a client’s family is ignoring a significant part of the holistic picture that clients feel may be most important.

Let’s start with the generation above; your clients’ parents. The “Sandwich Generation” of clients are raising children of their own while at the same time dealing with issues associated with aging parents. It is prudent and necessary to understand the situation of your clients’ parents, as it is likely to also have some impact on the lives of your clients.

At the very least, your client may be named as an executor, trustee or health care agent for a client. It used to baffle me when people told me of their woes at settling their parent’s estate, especially when they had no clue that they were even named in any of the possible post mortem roles. Insist that your clients know the provisions of their parents’ estate plan and what their role will be when the time comes. Some real old-school parents will not want to talk about it, but insist your client learn what role they may play and get a copy of the documents to see if they are current and proper. In many cases, you will find one of three scenarios: no documents, old documents or inadequate documents. If your client is stuck in a role with inadequate documents, help them get that fixed so it will not be an unnecessary burden down the road.

This issue gets particularly sticky when the aging parent has a second spouse as a result of death or divorce. Frequently the estate plan and the flow of assets changes, favoring the new spouse in some form or another. Sometimes the estate is left as an outright bequest to the new spouse, disinheriting your client and perhaps inuring to the ultimate benefit of whomever the second spouse chooses, including their own family. This action begins many a family feud, and it is better to find out now before dear old dad passes away. A better way to deal with second marriages may be to have trusts drafted with an independent trustee who can marshal certain assets for the health, maintenance and support of the second spouse, with any remainder going to your clients.

It is also fair game to see if they’ve done any planning with respect to long-term illness. This too is something often hidden in secrecy by the elder generation. Your client should want to know if their parents have the resources or insurance coverage to properly protect themselves and provide the quality of care that they may need. It is not uncommon to see no planning for long-term health care needs, and while your parent may not say it, their underlying assumption may be the expectation of care provided by a child. Unfortunately, these unstated wishes or plans typically fall on the most local child, especially if it is a woman. Your clients need to know well in advance what role they may be expected to play as a caretaker or housekeeper.

Long-term illness is commonly the start of family disharmony among the siblings; especially when it is predominantly one child who gets stuck with the lion’s share of the care effort. Experience has shown that a full-time family caregiver often hits the wall after six to 12 months of extensive care. During that time, resentment builds against the other siblings for not doing their fair share, and other parts of the caretaker’s life may begin to suffer, namely parenting and their own profession. This can also become a financial burden on your client, as they may lose income from work and incur out-of-pocket costs for which they feel uncomfortable requesting reimbursement from the parents.

The idea of being a Sandwich Generation parent may also extend to other close family members, such as aunts or uncles. Be sure to get a complete family tree with as clear a picture as possible of how any of it may impact your client.

While not many clients will want to count on an inheritance from their parents, many also realize that there may be a high likelihood of such. In instances where your clients have some wealth and income, it may be prudent for your client to consider passing these assets to be inherited right down to the next generation. When there are assets that may be helpful to your clients at reaching their goals, probe for ways to see that it is done in the most efficient manner. Perhaps the parents can help with education planning for the grandchildren or begin to make lifetime gifts to mitigate any future death tax burdens.

The bottom line when dealing up the family tree is to have open communications.

Don’t let the situation just happen without doing the best that you can to see that the parents’ financial affairs are treated with the care and diligence that you’d expect for all of your clients.



Looking down the family tree also needs a lot of attention. In recent years, it has been brought to the attention of the financial community that inheritors of assets will frequently migrate to someone other than their parents’ advisors. In fact, a practice where there is evidence of a relationship with the next generation generally receives higher valuation estimates due to the likelihood of maintaining the relationships beyond the passing of your client.

Your clients, however, don’t intentionally want to cause their children to lose their inheritance because of their own divorce, illness or foolish financial move. Without estate planning documents, for example, the children of your clients may receive outright ownership of inherited assets at age 18 or 21. A better approach might be through the use of a trust with an independent trustee who has certain discretion beyond making distributions for health, education, maintenance and support for that child. Your choice of trustee may benefit from someone who would act as the parent would if they were still able or living.

Care should be given to the protection of assets from a possible divorce impacting one of your client’s children. With the divorce rate still hovering in the 50 percent range, this issue should not be taken lightly. Once again, the use of trusts may help, but the actual protection provided by a trust may be determined more by the pattern of distributions and history of how the trusts are administered. If there is substantial wealth or a tricky asset, such as a family business or vacation home intended for the generations, perhaps your clients’ documents should be supplemented by a pre-nuptial agreement for their marrying children. This is something often easier said than done as the young marrying couple may feel that it is unnecessary. Many clients capitulate on this issue as they don’t want to be viewed as the bad guy advising that their children start a marriage with the end in mind. But this is a perfect use for your financial planner. The planner can get in there and explain why this makes sense and is strongly encouraged. Of course, your client eventually has the power to capitulate if they want or amend their estate plan to reduce the impact of assets going to an unprotected younger married couple.

Planning for the needs of younger children can also be important. In our firm, clients frequently accept our invitation to hold a family meeting. Sometimes these meetings happen to discuss the parents’ overall financial situation and estate plan, but at other times they are purely educational. We’ve held these meetings with children heading off to college about how to manage their cash flow and earnings from employment or for younger couples as they start to get their entire financial house in order. A good planner can help teach younger children all about savings, investments and spending to develop good habits at a young age. And for your client who intends to pay for the higher education of their children, it is never too early to start the discussion regarding the most beneficial way to save for that growing expenditure.



In addition to going up and down the family tree, it may be helpful to go sideways and ask a few questions about your clients’ own brothers and sisters. In many cases, it is a brother or sister of your client who is named as the guardian of minor children or the trustee of any trusts drafted. It is a good idea to inform those who you’d like to have a role in your estate, and request their permission. For example, if four minor children had to move into an aunt’s house because of a common disaster involving your clients, it would be nice to know that there would be adequate financial and living resources to accommodate this suddenly larger family. Will they need a larger home, should you provide a pool of money for them to do that and for the overall maintenance and support of your children? The prudent answer is to at least have that discussion so there aren’t unintended consequences of your children overcrowding their new family.

Too many financial planners and clients alike think that financial planning is all about asset management and having enough money to do what you want. While that is important, what is much more important is the totality of their lives and seeing that each and every area is in order and designed in such a way as to meet their objectives under a wide array or possibilities — not all of which are pleasant. If your clients think they have a good financial planner, and that person hasn’t helped to resolve all of these issues and the others that may be present in their lives, help them find a new financial planner.

And if, by chance, you are that financial planner who has ignored your client’s parents and children and other relatives in the context of their financial plan, have those conversations now. When you really get down to it, most of your clients will probably agree that family and health are truly the most important issues in their lives. AT

John P. Napolitano, CFP, CPA, is CEO of U.S. Wealth Management in Braintree, Mass. Reach him at JohnPNapolitano on Facebook or at (781) 849-2390.

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