Back to the future: Living with your adult child |
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Actuarial tables are used to determine the value of the life estate by a percentage of the home's value. The life interest
decreases as the purchaser gets older. For a 75-year-old person, the life estate would be worth just over 52 percent of the home's value,
Warner says, while the owners would keep the remainder interest of about 48 percent.
Generally, you become responsible for the taxes, insurance and upkeep as long as you occupy the house. The owners will
likely incur a long-term capital gain tax when they sell you the life interest, says Warner. If you are looking at this option, you
should definitely consult a good attorney.
Sometimes resources can be pooled from a group. Drew Tignanelli, a Certified Financial Planner and president of Financial
Consulate in Hunt Valley, Md., says that before the mother-in-law of one of his clients moved in, her four children chipped in a total of
$100,000 to pay for renovations. "They basically built an in-law suite onto the house for her," he says.
3. Be a considerate roommate
Being able to tolerate each other's habits -- and agree on the boundaries for what's not acceptable -- is essential to making this arrangement
work. It's a lot like learning to get along with your college roommate, only more complicated because of the inherent complexity of familial
relationships.
Will your hovering instinct kick in every time Suzie stays out a little late, even though she is 43? Or maybe it will be your
late-night habits that cause conflict. Say you're used to staying up till the wee hours watching old sitcoms with the volume maxed and laughing
as loud as you please. Sonny, daughter-in-law and the grandkids have to turn in early so they can get to work and school on time in the mornings.
If you're going to share living space, be prepared to make a least a few lifestyle compromises.
Valerie Wiener, author of "The Nesting Syndrome: Grown Children Living at Home," dedicated the book to her father, a successful
attorney and businessman who lived with her for the last four years of his life, starting at age 77.
"He said, 'You don't have to take care of me,'" says Wiener, who is now a Nevada state senator. "Well, the first dinner I cooked,
he made that clear because he went into a bedroom and watched the ballgame. So I didn't set the table anymore. But we were very good friends."
Because of his independent spirit, Wiener sometimes had to remind her dad to let her know of his whereabouts so she wouldn't
worry about him. "That's what you would do for a friend," she says. "The family should be no different."
4. Protect your assets
Maybe you'd rather cut off your right arm than even think that your Sonny or Suzie might take advantage of you. But look at it this way: The
controls you put in place now as to how much of your assets they can touch could save all of you from hurtful misunderstandings later on.
Warner recommends that the child you're living with stay out of your personal financial affairs. "There's too much of a close
fiduciary relationship," he says.
On the other hand, Evan Beecham, a Certified Retirement Financial Advisor and owner of Beecham Financial Services in Hillrose,
Colo., says the decision depends on how well you and your adult child/roommate get along. "I think it's a good idea many times, if the relationship
is good with the child and the adult, to be able to work together and for the child to help the retiree," Beecham says.
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