Today it is more expensive than ever to own your own home and live on your own, regardless of whether you are young or old. The complexities we live with in our world today have increased significantly over the past few decades. As such, it has become even more important to plan for multi-generational households.
A Pew Research Center analysis of census data found that in 2016, 20% of the U.S. population was living in multi-generational homes. That’s a record number and one that is expected to keep rising. In the article titled “How to Address Multigenerational Estate Planning Issues,” Financial Advisor Magazine asks what’s behind the numbers?
For some families it may be college students moving back with mom and dad while they pay off student loans and land their first real job. Or it could be a newly married couple living with one set of parents while they save money to purchase a home of their own. One of the trends gaining traction is for new parents to recruit their own parents to combine households. This allows for child care while creating a stronger sense of family. In still other families, having elderly parents move into their children’s home helps the seniors with aging issues.
As you can see, there are far more options today than we have seen in quite some time. They are changing the way families operate and as such are creating an increasing number of multigenerational households. This has its own set of issues from an emotional perspective in addition to affecting tax and estate planning concerns.
As families try to figure out their living arrangements, often time families add separate living quarters to their existing homes. States now have to address zoning issues that prohibited this kind of construction in the past. In many cases this has caused specific zoning changes to be made that didn’t exist only a few short years ago.
Pressures created by rising housing costs, housing shortages, and demographics have all contributed to this new trend. Navigating this kind of family “merger” requires a great deal of planning, including estate planning. Now the issue of how property will pass to the next generation becomes a little more complicated. Issues such as, “What about siblings who are not involved in the shared housing space,” are now relevant to an estate planning discussion. When this is the case, how should their portion of the inheritance be handled?
There are a variety of ways to navigate the closer relationship with aging parents and childcare needs. Some families elect to purchase a nearby condo where parents are living so at some point the parents can move from their single-family home to an apartment. For others, the parents move to an apartment within the home so their children and grandchildren can enjoy the larger living space.
Whichever way a family choses to set up their residences, it is important to take the time to meet with an estate planning attorney. They can help you work through the best way to set up the arrangement, including how property is titled and passes to the next generation. They can also make sure that estate documents like wills, trusts, power of attorney and health care directives are completed for all the family members. There are as many options as there are family members so getting a plan in place that can deal with the nuances and particulars of the family should be done sooner than later.