Increasingly, several generations of American families are living together. According to a Pew Research Center analysis of U.S. Census data, more than 50 million Americans, or almost 17 percent of the population, live in households containing two adult generations. These multi-generational living arrangements present legal and financial challenges around home ownership.
To many of us, the family home is just that, the family home. The focus is rarely a question of ownership, but on that special place where the family lives and comes together. In fact, more and more families are living together – with multi-generational homes on the rise. Some 17% of the population is living this way.
All that said, there are significant issues at play when it comes to actual home ownership and occupancy. How can a family keep everything straight and keep the family home? A house is not a simple kind of thing to own. Anyone who has seen a mortgage knows this. On the other hand, a multigenerational family living together with elderly parents is likely to present unique issues of inter-reliance, the upcoming need to transfer ownership, and even Medicare or Medicaid asset restrictions.
This is not a new problem, but reveals itself in various ways from family to family as ElderLawAnswers pointed out in a recently updated topic titled “What Are the House Ownership Options When Parents and Adult Children Live Together?”
It seems options are always in response to actual problems encountered. In this regard, and as the updated topic elucidates, there are a few easy options worth understanding and, perhaps, implementing:
- Joint Ownership, where an elderly parent and an adult child own the home in tandem and the house passes outside of probate to the co-owning child.
- Tenants in Common, where an elderly parent and an adult child own shares of the home and the parent’s shares can be passed by bequest, thereby involving probate but allowing the ownership to pass to another adult child other than the tenant child.
- A Life Estate, which allows an elderly parent to name an adult child as a “remainderman” and recipient of the house upon their passing, directly and without probate but not until their passing.
- A trust arrangement, by far the most flexible and powerful tool, especially when there may be many hands or interests to spell out or even a tax situation to resolve.
These are, at least, the basics of the problem and a few solutions. How do you and your loved ones own the family home? Are you prepared to safely and easily transfer the house? Have you considered the tax implications, whether to the estate or in the form of capital gains? If you do not have the answers to these fundamental questions, there is no time like the present to find them.
You can learn more about this topic as well as other strategies on our website under the tab entitled: estate planning in Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning.
Reference: ElderLawAnswers (February 25, 2014) “What Are the House Ownership Options When Parents and Adult Children Live Together?”