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Estate planning tools for transferring assets to parents

Generational transfers of wealth do not only go one way. To be sure, the usual pattern is parents passing along assets to children and other heirs. This is done through wills, trusts, gifts and other estate planning devices.

With people living longer than ever, however, and health care so expensive, the usual pattern can sometimes be reversed. Adult children may become aware of the need to transfer money or other assets to their parents. It's an issue not only in Massachusetts, but across the country.

For many adult children, the need to help their parents is clear. After all, the parents brought them into the world and gave crucial support to get them started in life. So when an aging parent exhausts his or her assets, an adult child naturally looks at options to keep the parent from floundering financially.

The option chosen should be carefully considered. There may, for example, be significant tax consequences involved for the adult child, depending on the nature of transfer that is chosen. Clearly, though, the need is there. A study by one nonprofit group showed that more than half of people over 65 struggle to pay for such basic needs as housing and health care.

Keep in mind, too, that there are several different options for transferring assets to parents. These include:

• "Upward" trusts that are specifically designed for elders

• Intrafamily loans

• Bill-paying arrangements

• Gifts

Of course, the option that works best for you and your family depends greatly on your unique circumstances. A conversation with an experienced trusts and estates lawyer can help you clarify your strategy for providing the most effective - and meaningful - assistance.

Source: "Paying Them Back," The Wall Street Journal, Julie Steinberg, 2-8-13

Our firm handles situations similar to those discussed in this post in Massachusetts. To learn more about our practice, please visit our page on trusts.

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