The number of Americans age 65 and over has topped 40 million, or 13% of the U.S. population. That’s the most ever, both in sheer numbers as a percentage, and the number will grow rapidly. It’s estimated that the 65-plus population will make up one-fifth of the nation by 2050. Not only is the share of seniors growing, health care advances are pushing the oldest of the old to even longer lifespans.
The fastest-growing age group among seniors is 85 to 94, jumping 30% to 5.1 million the last decade, according to the Census Bureau. The number of centenarians is projected to exceed 600,000 in 2050. That’s good news except for one key factor: Half of those living beyond 85 have Alzheimer’s disease, a condition that devastates one’s quality of life.
And the cost of care keeps rising, so if proper planning is not put in place, seniors will inevitably run out of money. Adult children often mistakenly believe that Medicare and other retiree benefits will pay for their parents’ care. In fact, only long-term health insurance will cover custodial care.
The complications of inheritance only intensify when the children must care for an aging parent. If the estate is not clearly divided in a will, for instance, children who took care of aging parents often feel that they should inherit more than the siblings who did little — either by choice or because of geographic considerations, according to estate lawyers. And often, the children who do care for them are tempted to dip into their parents’ savings before they die because they figure it’s coming to them eventually.
Self-interest works both ways. Often, aging parents dangle the prospect of an inheritance to make sure their children will care for them in their later years. Yet most parents distribute assets equally between children and most don’t like to play favorites, even if one child did more for them.
Tangled family trees
Family feuds over inheritance are as old as the Bible (Jacob tricked his twin brother Esau out of his birthright and their father’s blessing.), and they can multiply in blended families. There are ex-wives and ex-husbands, children and stepchildren, parents and stepparents.
More than half of all first marriages end in divorce and about 75% of divorced people will marry again, according to the National Step family Resource Center. About 65% of these unions will include children from previous marriages. More than 40% of American adults have at least one step-relative, according to a Pew Research center study earlier this year.
Boomers who started families later in life are feeling the pressure. They are dealing with children’s college bills while Mom is 87 and needs care.
Paula Goldie, 57, is a typical Baby Boomer who celebrated her 50th by taking up scuba diving. She plans to learn the rumba for her 60th. Goldie’s married and has a 40-year-old stepdaughter, a 25-year-old daughter and 20-year-old granddaughter. Her mother died 16 years ago, but her father, 82, remarried. His wife, 67, has four adult children.
Goldie is a court clerk in the Portland, Oregon area who is inheriting something she’s not even sure she wants. Her father’s house which is 1,000 miles away in Southern California will be left to her. The problem is that her dad has a reverse mortgage, and he wants his wife to stay in the house after he dies. Goldie wants to respect her father’s wishes but worries that she will be stuck spending money to allow his widow to live there for free.
If his wife stays in the house, “she would have to pay taxes, but her name is not on the house,” Goldie says. “Her children have already looked at the furniture in the house and said, ‘Gee, I would like that.’ … The house is pretty much going to be a wreck. If he passes, I still have to deal with it.”
As much as she wishes she didn’t have to, Goldie sees taking care of the house as her duty and something her late mother would have wanted. In the meantime, she has yet to draw up her own will.
Putting it off is “one of the things so many of us Baby Boomers are facing,” she says. “Death in the family brings out the best or the worst in people. There’s no gray area.”
What to do?
There are no foolproof solutions to the wills problem, but talking about these issues when parents are still alive can help. Good planning is also crucial. Family fights are not just about money. Often people fight over tangible personal property because of the memories they bring up. A good way to handle this in your estate plan is to let your children take what they want and if more than one child wants certain items, draw numbers from a hat and take turns choosing these.
These days boomers’ children are often getting their inheritance in advance – by help for education, help buying their first business and their first house. Disputes happen because often one child feels that they’re getting the shorter end of the bargain.
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