In recent years it’s become increasingly common for families in Florida to live in multigenerational households. In many of these multi-generational household situations, an adult child lives with elderly parents. This can arise for any number of reasons, but often occurs because either the child or the parent is in financial difficulty, or the parents requires assistance because of suffering a health problem.
Regardless of the reasons for why adult children of elderly parents live in the parent’s home, there are several estate planning issues that parents need to be aware of. Let’s take a look at some of the common potential problems that could arise in this type of situation.
Whether an adult child pays rent to a parent while living in the home or not is up to parent to decide. However, after the parent dies and the child continues to live in the home, it will no longer be up to the parent. If the parent has not created a trust or other form of property ownership that allows the real estate to pass outside of probate, an estate executor will have to manage the property after the parent dies. It’s the executor’s responsibility to ensure the estate assets are managed appropriately, meaning that he or she will most likely charge the adult child rent if the child continues to live in the home.
There’s also a question about what will happen to the home after the parent dies. While the adult child might want to live in the home, especially if he or she inherited it, it isn’t always possible. If, for example, the parent had multiple children and left the home to each of them, the other children might decide that they want to sell the property. In this situation, the child living in the home would either have to purchase the property from the other children or find a new place to live.
Many of the potential problems that could arise in this situation can be avoided if the parent chooses to create an estate plan ahead of time. It’s important for the parent to feel free to make whatever choices he or she believes appropriate. For example, the parent might want to leave the home to his or her children as joint owners, or might want to sell the property and distribute the inheritance funds directly.
Regardless of the choices the parent makes, discussing these choices in advance can also be beneficial. If the children know what the parent wants in advance, they will be less likely to get into a fight about inheritance after the parents dies.