The challenges that accompany multiple generations living under one roof are becoming more common place in today’s society. It is not unusual for an elderly parent to move in with their children for safety and support. From a legal perspective, there are some potential problems that can be avoided by putting the proper documents in place.
Recently I met with a client who was moving in with her daughter and son-in-law. She had given her daughter a substantial amount of money to improve the home to ensure her comfort. This could raise a few concerns if the living arrangements did not work out.
When giving money to someone, it is considered a gift and the person giving the gift loses control over the money. Even if the intent is to improve the home, the daughter can do whatever she wants with the money. It would be more prudent to give the daughter a loan with the stipulation that should the arrangement not work out, some or all of the money would be repaid. This should be clarified in a written agreement that is legally executed for the protection of both parties.
There is also the issue of money being distributed to one family member and not the others. The daughter has benefited from an improved home. Is that fair to the others? It is important to discuss the intent and make arrangements to compensate the other family members in Mom’s Will or Living Trust.
This also raises a dilemma if the daughter should predecease her mother. More than likely the house would then go to the son-in-law. He may not want his mother-in-law living with him and could ask her to leave. It would be wise to have an Occupancy Agreement in place that would allow the mother to live in the house as long as she chooses.
If both the daughter and son-in-law predecease Mom, the grandchildren would most likely inherit the house. They could choose to sell the home in order to distribute the proceeds. Again, this would be an example of using an Occupancy Agreement to allow the grandmother to reside in the home. Another planning vehicle would be to create a life estate to allow her to live in the house for the rest of her life.
These are just a few examples of problems that could arise when multiple generations are living together. It is advisable to meet with an estate planning attorney to discuss protecting yourself and your financial future.
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