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When is reverse estate planning right for a family?

Mar 25, 2022 | Estate Planning And Probate Law

When one considers what legal and financial plans may be useful for the future, it is often in the context of a Texas parent thinking of how he or she may care for heirs and beneficiaries after passing. While parents do want to care for their grown children and other family members, there are also many situations in which adult children need to care for their parents. In these situations, reverse estate planning may be a useful tool.

Understanding reverse estate planning

Assets do not always flow in one direction, such as from an older individual to his or her children and grandchildren. Reverse estate planning provides the opportunity to protect a family’s wealth while meeting the needs of older family members. In cases where this strategy is helpful, the parents have significant needs or the children have more wealth and assets than their parents.

This process provides the opportunity for adult children to use certain tax strategies to avoid penalties while passing wealth to their parents. Adult children may use low-interest loans to care for their parents, or they may use gift and estate tax exemptions to pass specific amounts of money directly. The right approach to reverse estate planning depends on the details of the individual situation.

When is it right?

An assessment of the specific situation will reveal whether a reverse estate planning strategy is the right approach for a Texas family. It may also be helpful to work with an experienced attorney to understand how to create an estate plan that will benefit multiple generations. Careful estate planning can provide an entire family peace of mind for the future.