Living with parents needs forethought

PETER G. MILLER ASK OUR BROKER


Q: Our parents are in the process of retiring to a new location. I'd like to join them, but I'm finding that despite a good education and training I have not been able to advance in my field because of widespread layoffs. I know it's not "cool," but I'm thinking of buying with my parents and sharing a house. Does this sort of thing happen very often?

A: In many cultures the young help the old, and the idea is fairly common in the U.S. According to a study by the National Association of Realtors, 13 percent of all existing home purchases actually involved multi-generational real estate.

"The main reasons for purchasing a multigenerational home," said Brandi Snowden, a research survey analyst with the NAR, "were for the health and caretaking of aging parents (22 percent), cost savings (14 percent), children or relatives over 18 moving back into the house (12 percent), to spend more time with aging parents (8 percent), and children or relatives over 18 that never left home (8 percent)."

There are a number of issues to consider with multi-generational housing.

First, what are residents' health needs and how might that change in the future?

Second, what kind of property works best for everyone? One possible option is a singlestory property with an "in-law suite" that is separate from the other bedrooms in the house.

Third, what are the financial arrangements? Who pays for the mortgage — if there is one — in addition to such things as utilities, taxes and insurance?

Fourth, what happens if things change? For example, who gets ownership of the property in the event of the parents' passing? What if someone wants to move or has to for work?

Fifth, what if there's a divorce? The Census Bureau says that by age 60 almost a quarter of us have been married at least twice and 9.1 percent have been married three times. Divorce happens and when it does the financial consequences can be substantial.

Essentially, you want to look at two separate types of information. What kind of property and location would work best? And what kind of paperwork do you need to make a multigenerational arrangement workable? Consider issues like wills, title to the property, how profits and losses are to be divided in case of the sale, and how costs are to be shared.

For advice, speak with an attorney who specializes in elder law and a fee-only financial planner.

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