In our position as a financial planning company, specialising in helping people manage the financial aspects of moving from one country to another, we see one issue that is often overlooked.
This relates to having elderly parents living in a different country, and the plans you have in place for ensuring their comfort and wellbeing if they are unable to look after themselves.
If you are in the position of having elderly relatives, as well as children, who are financially dependent on you, you are one of the “sandwich generation”.
The expression is not new. It was first coined by an American sociologist named Dorothy Miller in 1981. It refers to the increasing number of people, usually between the ages of 40 and 60, who are financially supporting their elderly parents as well as their own children.
In this article, discover some of the challenges you may face as a member of that generation, and how these could be accentuated by geography.
Grasping the nettle of talking to your parents about their finances
When it comes to understanding your parent’s financial position, the first step is to talk to them about it. Only then will you have a clear idea of what your future financial obligations may be, and how you can plan for them.
Clearly, such conversations can often be awkward and can stem from the natural reticence many people have around talking about their wealth.
However, if you feel that you may become financially responsible for your parents, to a greater or lesser extent, then it’s a nettle you need to grasp.
In reality, despite any reluctance you may have, you could well find that they are relieved to talk about it, especially if they have started to become aware of their financial circumstances and have concerns about their future.
Furthermore, they may have already started thinking about a future with you living some distance away, so, again, it’s important to have these discussions now.
It’s vital to understand their financial position
You’ll want to get a clear idea of their current situation and, as part of this aim, you’ll want to encourage them to get their financial affairs in order.
This will give you a clear idea as to how dependent they may be on you, as well as helping you begin to judge the level of support they are likely to need.
You will want to ascertain important information such as:
- Whether they are claiming all the benefits they are entitled to
- The various income sources they have
- Any debts they have.
At the same time, you’ll want to broach the subject of legacy planning, and ensure they have up-to-date wills in place. This will ensure their estate is distributed in line with their wishes.
You will also want to consider any Power of Attorney arrangements they have, and who will manage their affairs if they are no longer able to.
Living in different countries will add a level of complexity
An issue that will be central to any discussions you have with your parents about their finances will be where they, and you, will be living.
At a straightforward level this will mean you understanding their plans when it comes to their existing property, such as whether they are planning to downsize to a smaller residence.
While they may be in good health at the current time, you’ll want to help them consider their future plans in the event of their physical capacity reducing and them requiring care or other support.
You’ll need to strike a balance between respecting their wishes but being aware of their ability to look after themselves safely.
At a more detailed level, you’ll need to consider what would happen if you’re living in a different country, and are likely to remain there for at least the foreseeable future.
A lot may depend on your family structure. If you are an only child, it’s understandable that a lot of the responsibility could fall on your shoulders, and this may have a bearing on your future plans. For example, you may need to address the possibility of having to move at short notice in the event of a single elderly relative falling ill and requiring detailed care provision.
Obviously, if you have siblings in the same country, it could make your decision-making easier, but you will need to consider all points of view, including the potential financial implications of caring for an elderly relative.
The sooner you start thinking about this, the easier it will be to plan. For example, you may want to review their Power of Attorney arrangements to ensure that, if you are living abroad and are the only sibling, they have someone named who can act on their behalf in an emergency.
Clearly, any plans may change, but knowing you have an outline idea in your mind can be useful – and provide reassurance for both you and them.
Your children may also present you with financial challenges
The other slice of bread, as it were, topping your sandwich, is your children.
While the financial issues you face may be less complicated, and perhaps less emotive than those relating to your own parents, how you support your children financially is likely to be an area you will want to plan for.
At a basic level you will probably want to set money aside for them while they are growing up, with a view to being able to help them financially with some key milestones such as buying their first car or getting on the housing ladder.
You may also want to consider funding their education in the form of school fees and university tuition fees, as well as perhaps contributing to their living costs.
There may be different challenges, however, once they have left home and are no longer dependent on you.
After all, if you have gone through the experience of being responsible for your own parents, you may want to take proactive steps to avoid leaving your own children in a similar position. This could include making financial plans to cover the cost of care in case you need it.
As with you and your parents, it can help to start having conversations with your own children with regard to your plans and wishes for your later life.
Find out more
We have previously written a series of articles about financial planning for your children that address some of the issues you have read about in this section and that you may find helpful.
Financial tips for your children as they start university
7 essential financial lessons you should teach your children
5 simple financial planning steps that can help your children in the future
Get in touch
At bdhSterling, we have a wealth of experience in helping clients with their financial planning.
Get in touch to find out how we can help you.
Please note
The value of your investments can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
This article is for information only. Please do not solely rely on anything you have read in this article and ensure that you conduct your own research to ensure any actions you may take are suitable for your circumstances. All contents are based on our understanding of ATO and HMRC legislation, which is subject to change.
