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Creative ways of paying it forward through upward wealth transfers

NAELA National Academy of Elder Law Attorneys, Inc. MEMBER

Most parents were there to look after their children - to feed them, put clothes on their backs, and make sure that they bathed even when they didn't want to. In a way, it may have been preparing their young to "pay it forward" once they grew old. Due to medical advances and healthier living, many people are living longer than anticipated and as a result, needing both physical and financial nurturing as they have started to outlive their nest eggs.

This new dilemma of outliving the planned resources for late life care, presents difficulties for those who are adult children to aging parents. It is requiring these children to transfer assets upward to care for their parents rather than the normal downward wealth transfer that has historically taken place between generations. That is why private bankers, attorneys, and accountants alike are all suggesting new strategies for dealing with these potential financial hazards that may have gone unaccounted for.

Some creative ways in which you can transfer wealth upwardly are (1) annual gifts, (2) pay their bills, (3) intra-family loans, and (4) upward trusts. Each of these means have their pros and cons. These plans usually carry with them tax savings, but they also tend to be geared towards ensuring that the younger generation maintains their wealth planning goals while assisting with their loved one's financial needs.

If you would like to explore some of these innovative upward wealth transfer options, please contact an attorney practiced in both elder care and estate planning. A knowledgeable attorney can help you in crafting a creative plan that allows you to care for the elderly in your life as well as plan for your own wants and needs as well. Creative solutions to your family's care and asset protection will be their number one priority.

Source: The Wall Street Journal, "Paying Them Back," Julie Steinberg, Feb. 8, 2013

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