A few option suggestions for empty nesters
After the children leave and parents are left alone in a house that might now seem too large and too expensive to maintain thoughts can wander in several directions forging the way ahead. Does it make sense to stay? Especially when one parent dies and the other is left to herself, what are the choices?
Parents might look to move to a senior continuing care retirement community or, alternatively, consider moving to be closer to adult children and their families or even combining families. This is where some creative planning can help to sell one house, possibly expand another by adding an “in-law suite” or combining finances to buy a home large enough for everyone. A knowledge of real estate, finances and personal preferences can result in a plan and here is one area where an experienced elder law attorney can help.
Multigenerational living, only one of many options, is likely to become more common as people live longer. Shared households can bring the added benefit of convenience and save expenses. Two households can share expenses including mortgage, property taxes, utilities, and so on.
A successful arrangement can depend on the level of flexibility that the generations have in dealing with each other and the specifics of the individual living arrangement.
One area where a joint living arrangement can be derailed is in misunderstood expectations on both sides. This is where it can help to have in writing, a family agreement, which describes what is anticipated. Joint living arrangements deal with finances, estate planning, and personal experience and convictions. Here are some successful examples our office has dealt with.
Parents and Adult Children Buying a House Together. Parents have been living in their house for most of their adult lives but the home either would need major modifications for handicapped accessibility or is located too far away from their nearest adult child to allow for regular visits. Adult child and family are open to the idea of purchasing a home together.
Parents sell their home. Adult child and spouse sell their home. Together they buy a much larger house with more modern conveniences and handicapped accessibility or able to be made handicapped accessible without too much difficulty and expense. Parents might contribute the down payment. Adult child’s family also contributes to the settlement costs and/or some of the down payment and, because adult child has a regular income from employment, he or she and spouse make the monthly payments on the mortgage.
An elder law attorney can draft the family agreement, work with the Realtor and attend the settlement. House can be titled in joint names — one-half owned by father and mother, one-half owned by adult child and spouse. Titling is tricky. Each half would be tenants by the entireties as between the spouses but joint tenants with right of survivorship as to the whole. The agreement if properly drafted, also takes care of Medicaid concerns later.
Parent Moves In With Adult Child. Parent who is a widow or widower comes to live with son or daughter and his/her family. Parent makes monthly payments which are described as “contribution to household expenses” (not rent) which is actually true. It is expensive to run a household which include costs for electric, water, telephone/television, groceries, repairs, property taxes, mortgage and so on. Again there should be a written agreement to describe all of this. Informal unwritten understandings might run into difficulty with Medicaid rules regarding “gifting.”
When a parent moves in with an adult child’s family, often modifications need to be made to the house whether it is adding a new bath or even an “in-law suite.” Zoning and building regulations need to be considered. Who should pay for what. If a parent pays for modifications, there should be a written agreement to avoid the possibility it might be considered a “gift.”
Adult Child Moves In With Parent. One plan that has been very successful for several clients has been a “buy in” with an adult child obtaining a home equity line of credit to purchase an interest as joint tenant with right of survivorship. The house can be inherited by paying one-half of the value and there is protection dealing with the Medicaid rules. We call it “whole house for the price of half a house.”
None of these strategies should be attempted without professional advice, but individual custom arrangements can be crafted for the family.
Janet Colliton, Esq. is a Certified Elder Law Attorney. Her practice, Colliton Elder Law Associates, PC is limited to elder law, life care, special needs and estate planning and estate administration, and guardianship with offices at 790 East Market St., Suite 250, West Chester, PA 19382, 610-436-6674, colliton@collitonlaw.com. She is a member of the National Academy of Elder Law Attorneys and, with Jeffrey Jones, CSA, co-founder of Life Transition Services, LLC, a service for families with long term care needs. Tune in to radio station WCHE 1520 at 4 p.m. on Wednesdays for “A Plan Ahead,” with Janet Colliton, Colliton Elder Law Associates, and Ron Ehman, Next Home Signature.