Multi-Generational living: Everything old is new again.

Friends of mine are an inspiration, they seem to find ways to stick together, help each other, and have fun no matter what the circumstances. Several year ago, the parents, daughter and son were all working in the same city but house prices were increasing and the children could not save enough to afford a down payment. After much discussion, they decided to buy a house as a family, put the money the 3 groups were paying into rent towards the mortgage and see if pooling their resources would help them get ahead. A few years ago they sold the house and each of them was then in a position to buy their own homes using the proceeds from the sale of their joint home.

According to this Pew Research Center Report, this kind of multi-generational household is on the rise. The report shows that in 2008, 20% of young adults returned home in the US. Some are grown children returning home for a while others are grown children taking in an elderly parent either by building a suite or renovating a room. The reasons are generally practical; an aging parent may have a big house that is paid for and has space and yard the parent doesn’t necessarily need; adult children may, like my friends, be struggling to pay for a house with suitable room for their growing family.

There are many creative examples of how these needs can be met to everyone’s mutual benefit but while most people focus generally on the big issues of financing their cooperation, they often miss the many smaller issues that lead to giant headaches down the road. There may be issues with zoning; the shared ownership structure, estate planning, general liability, landlord/tenant disputes, tax, privacy, and the usual roommate issues all under the emotional umbrella of ‘family’.
Take the example of a client who converts a garage on the family home into suite for his aging mother. He, his wife and their children then move into the old house. But how is the property transferred to the child? Is the property ‘sold’ to the children or gifted? Does the parent provide a mortgage or the bank? Do they sign a rental agreement or put the property into joint ownership, or tenants in common? Who paid for the rezoning? The construction costs? The increase in property taxes thanks to the improvements? What happens if the child and spouse divorce? What about care giving – can a grand-parent offering child care now expect elder care down the road?

What about the situation where there are other children who don’t live with their parent. It is especially important in BC to structure the deal properly so it is clear to all and doesn’t effect estate planning later on.

Not every family has to deal with all these issues but most should deal with a large number of them. Family can take a lot of time and work; if you are thinking of this type of family collaboration please feel free to talk to us here at Vangenne & Company to make sure you are helping each other out without creating headaches or hard feelings later on.