Ask Money

Under One Roof?

Chris Farrell Sep 11, 2008

Question: After the death of my father, my siblings and I discussed one of us living closer to mom. She lives in SoCal and the cost of living is much higher there (duh). One option is going in on a place with my mother as co-owners, and I would live there. I am guessing I will need to locate some sort of contract, or meet with a real estate attorney to draw this up. Can you provide any advice on this topic, or just outline some of your thoughts? Andrew, Boise, ID

Answer: What you’re thinking of doing could become increasingly common with the aging of the population. Indeed, many members of the “sandwich generation,” who now find themselves responsible for the welfare of both their parents and children, are embracing such living arrangements that were more common a few generations ago. And even if young children aren’t involved, living under the same roof offers less expensive independent living for older people and their adult children. It can be very good from a family perspective.

That said, the move represents a big financial and emotional commitment for an extended family. To make it work often takes many hours coming up with the right financial arrangement that not only are good for you and your Mom, but also take into account your siblings. You will need a lawyer to draw up legal documents, and in cases when substantial assets are involved working with a financial planner is common.

Among the questions to ask: How will you divide utility and other bills. Will you share co-ownership? Will you pay rent to your Mom or vice-versa. Who gets the tax deduction on the mortgages? Questions along those lines. All of this is routine in this market, and there is a fair amount of flexibility in making financial arrangement, but everything should be laid out and well-understood.

Family dynamics came into play, too. How will your siblings react to the financial arrangement?. Will they support you and your Mom? And what are the implications of living under one roof for the division of her estate?

Last, you will at some time in the future be the point person for dealing with disability and death. It’s a good idea to talk them through, since you’ll be living in the same place. You have to really think about the endgame, more than a lot of people are comfortable doing. That said, I do believe that this kind of arrangement can work for everyone.

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