Sharing Households: Considerations for Multi-Generational Families

Living together with family members is a great choice for many people. However, combined living arrangements can also lead to legal conflicts and unintended consequences. If you're living in or are transitioning to a multi-generational home, here are a few things to consider.

Estate Planning for Multi-Generational Households

An increasing number of families live in multi-generational homes. Before the rise of nursing facilities, this was the easiest way for children to care for their elderly parents. With more options now for in-home health care, many elderly parents are once again moving in with their adult children. Often adult children also move back in with a parent to help with health care and in-home support. This might allow the aging parent to stay at home (or in an adult child's home) while retaining independence and privacy. This living situation can also provide support to the adult child in a busy household. Either way, due to complex financial issues, multi-generational households need effective estate plans to protect their assets, achieve maximum savings, and divide property fairly.

Property and Homeownership

Every blended household needs to decide who will inherit the house. If the adult child moves in with an aging parent, other siblings might feel slighted based on how the assets are divided on the parent's death, especially if the live-in child is favored in inheriting the home. If an elderly parent moves in with the adult child (and grandchildren), on the other hand, and the child dies before the parent, complexities arise in making sure the parent has a place to live, especially if the grandchildren move elsewhere. Adding to these layers are considerations for assets being exempt from qualifying for benefits should the elderly parent need to move to an assisted living facility or nursing home.

Life Estates

Homeowners can give elderly relatives a life estate in their property to ensure that the elderly relatives will always have a place to live. These arrangements are useful any time that you want a loved one to remain in your home regardless of who will inherit it later. Life estates can be granted by the current homeowner or secured during a real estate transaction. If the elder parent is the property owner, these elderly homeowners can give themselves a life estate and make the children the ones who take the ownership on the parent's death. But this can create difficulties if the parent no longer wants to live in the home, wants to mortgage the property, or sell the property. Further, care must be taken to assure homestead status remains on the property. Sometimes, an Enhanced Life Estate (also called a Lady Bird Deed) can be a better answer.

Creating a Multi-Generational Estate Plan

Life estates and other plans must account for problems that can emerge when you involve several generations or relatives who don't always agree. Because every family is different, estate plans need to be tailored to each person. An estate planning attorney should take time with you to address potential challenges and conflicts.