Wealth Management

  • Noelle Merwin
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Members of the “sandwich generation” face unique estate planning circumstances
Members of the “sandwich generation” face unique estate planning circumstances 1200 1200 Noelle Merwin

Members of the sandwich generation — those who find themselves simultaneously caring for aging parents while supporting their own children — face unique financial and emotional pressures. One critical yet often overlooked task amid this juggling act is estate planning.

How can you best handle your parents’ financial affairs in the later stages of life? Consider incorporating their needs into your estate plan while tweaking, when necessary, the arrangements they’ve already made. Let’s take a closer look at four critical steps.

  1. Make cash gifts to your parents and pay their medical expenses

One of the simplest ways to help your parents is to make cash gifts to them. If gift and estate taxes are a concern, you can take advantage of the annual gift tax exclusion. For 2025, you can give each parent up to $19,000 without triggering gift taxes or using your lifetime gift and estate tax exemption. The exemption amount for 2025 is $13.99 million.

Plus, payments to medical providers aren’t considered gifts, so you can make such payments on your parents’ behalf without using any of your annual exclusion or lifetime exemption amounts.

  1. Set up trusts

There are many trust-based strategies you can use to assist your parents. For example, if you predecease your parents, your estate plan might establish a trust for their benefit, with any remaining assets passing to your children when your parents die.

Another option is to set up trusts during your lifetime that leverage your $13.99 million gift and estate tax exemption. Properly designed, these trusts can remove assets — together with all future appreciation in their value — from your taxable estate. They can provide income to your parents during their lives, eventually passing to your children free of gift and estate taxes.

  1. Buy your parents’ home

If your parents have built up significant equity in their home, consider buying it and leasing it back to them. This arrangement allows your parents to tap their home’s equity without moving out while providing you with valuable tax deductions for mortgage interest, depreciation, maintenance and other expenses.

To avoid negative tax consequences, pay a fair price for the home (supported by a qualified appraisal) and charge your parents fair-market rent.

  1. Plan for long-term care expenses

The annual cost of long-term care (LTC) can easily reach six figures. Expenses can include assisted living facilities, nursing homes and home health care.

These expenses aren’t covered by traditional health insurance policies or Social Security, and Medicare provides little, if any, assistance. To prevent LTC expenses from devouring your parents’ resources, work with them to develop a plan for funding their health care needs through LTC insurance or other investments.

Don’t forget about your needs

As part of the sandwich generation, it’s easy to lose sight of yourself. After addressing your parents’ needs, focus on your own. Are you saving enough for your children’s college education and your own retirement? Do you have a will and power of attorney in place for you and your spouse?

With proper planning, you’ll make things less complex for your children so they might avoid some of the turmoil that you could be going through.

If you have questions about estate planning strategies tailored to the needs of the sandwich generation, reach out to your Smolin advisor.

Savings Bonds & Taxes: What You Need to Know
Savings Bonds & Taxes: What You Need to Know 150 150 smolinlupinco

U.S. Treasury savings bonds offer security, simplicity, and government backing but also have tax implications. Like any interest-bearing investment, understanding how they’re taxed can help you maximize your savings. 

Understanding deferred interest on Series EE Bonds

Series EE Bonds earn interest differently depending on when they were purchased. Bonds issued since May 2005 have a fixed interest rate, while those bought from May 1997 to April 2005 follow a variable market-based rate.

Paper EE Bonds (issued between 1980 and 2012) were sold at half their face value—meaning a $50 bond costs $25 and only reaches full value at maturity. Today’s electronic EE Bonds are sold at their face value, so a $100 bond costs $100, and they earn a fixed interest rate that’s set before you buy the bond. They earn that rate for the first 20 years with a possible rate adjustment for the final 10 years.

Electronic EE Bonds must be held for at least one year, and redeeming them within the first five years is subject to a penalty.

Unlike traditional interest-bearing accounts, EE Bonds don’t pay interest regularly. Instead, accrued interest is reflected in the bond’s redemption value. The U.S. Treasury provides tables that show the redemption values so you can track growth.

By default, interest isn’t taxed until the bond is redeemed, allowing for tax deferral. Bondholders may choose to report interest annually, and if so, all previously accrued but untaxed interest must be reported in that year.

There are cases when reporting interest early can be beneficial. For instance, if the bondholder has little to no other current income, it may be a wise decision to incur the income in those low or no tax years to avoid future inclusion. The same is true for bonds owned by children, though the “kiddie tax” rules may apply.

Unless you opt to report interest annually, all accrued interest is taxed when the bond is redeemed or transferred—unless it’s exchanged for a Series HH bond. EE Bonds continue earning interest even after reaching their face value, but once they hit final maturity at 30 years, interest stops accruing and must be reported (again, unless it was exchanged for an HH bond).

If you own EE bonds (paper or electronic), be sure to check their issue dates. If they’ve stopped earning interest, it might be time to redeem them and reinvest the money in a more profitable option.

Inflation-protected savings with Series I Bonds

Series I savings bonds are designed to keep pace with inflation so your money retains its purchasing power. The earnings rate combines a fixed rate, which remains constant for the bond’s lifetime, and a variable inflation rate that adjusts twice a year. New rates are announced every May 1 and November 1.

Series I bonds are issued at face value, meaning you pay the full amount upfront, and bondholders have two options for reporting interest:

  1. Defer taxation until the bond reaches final maturity, is redeemed, or is otherwise disposed of—whichever comes first.
  2. Report interest annually as it accrues rather than deferring it.

If you choose to report interest annually, the election applies to all Series I bonds you currently own as well as any future purchases and other discount-based investments, like Series EE bonds. This election is binding unless changed through a specific IRS procedure.

State and local tax exemption and education benefits

While interest earned on EE and I bonds is subject to federal income tax, it’s exempt from state and local taxes.

Additionally, if the funds are used for qualified higher education expenses, you may be able to exclude the interest from federal taxes, provided that your income falls within certain limits.

In 2025, this tax benefit begins to phase out for modified adjusted gross incomes (MAGIs) above $149,250 for joint filers and $99,500 for others (up from $145,200 and $96,800, respectively, in 2024.) The exclusion disappears entirely at MAGIs of $179,250 for joint filers and $ 114,500 for others (up from $175,200 and $111,800 in 2024).

Have questions about savings bond taxation? We’re here to help. Reach out to your Smolin advisor today.

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