Many people today live in multigenerational homes, where children, parents, and sometimes grandparents coexist. With multiple generations living in the same home, complex issues can arise. Increasing real estate costs, increasing childcare costs, increasing costs of nursing homes, increasing opportunities for remote work, and the changing landscape of work and education due to the Corona virus, have led to the emergence of more multigenerational families.
These living situations can raise questions, such as whether the grandfather pays for the in-laws’ apartment in his child’s estate, and who owns the property; Or, if an adult child living with elderly parents contributes to property modernization, maintenance or care services for elderly parents, does this lead to inequality in inheritance? All these questions can be answered in Estate planning Documents help family harmony.
Who owns the property: expect future problems
Depending on who lives in the house, the first question we suggest considering is how the property is owned. Should ownership be taken jointly, as tenants in common, with an estate for life, or on a trust, as a family partnership or otherwise? Which family members should be allowed to live in the house? How the surname affects how the other heirs receive a share of the estate legacy? How will utilities, maintenance, repairs and capital improvements be paid for now and in the future?
Many families choose to use a trust to detail all aspects of use and ownership related to the property. the trust It could include language relating to the right of first refusal, language governing who has priority in the purchase of the property upon the death of a parent, equality language between beneficiaries to account for gifts made to certain family members during life, and tax provisions to ensure that beneficiaries pay applicable taxes equally or proportionately.
The fund can manage funds to cover various expenses related to real estate, as well as details the management and use of real estate in proportion to the needs of the specific situation of the family.
The disability or death of a family member and what will happen to future generations can also be dealt with in a trust. This level of detail can be incredibly powerful when dealing with the purchase and use of intergenerational real estate, as well as addressing the element of estate planning and how the property will be used in the future.
Instead, using LLC or partnership It often allows for easier part-ownership of the property between different family members and provides management of joint use. LLCs can also help protect assets and possibly privacy.
The limited liability operating agreement specifies which members will be responsible for the day-to-day operation of the property, paying expenses and how ownership interests are divided. Loans can be leveraged within the family to make improvements to the property, and a partnership agreement can address many different scenarios for the family should a problem arise.
There are administrative costs to set up LLC You should keep in mind – your state’s filing fees, legal fees associated with creating an LLC operating agreement, and potential annual tax returns.
Who takes care of and who inherits the property?
If a child is caring for an aging parent, or a grandparent is regularly caring for grandchildren, should that be monetized and included in the estate plan somehow? Will those individuals who provide exceptional care for other family members be compensated in some way? Should the value of the property be used for this purpose?
This is an area that can be fraught with danger for many families. However, there is no single correct answer to this question. How each family chooses to handle this situation depends on the family dynamics and what is right for each individual family.
Often, a sibling or other family member who is not helping with care may feel upset if they receive less inheritance. If it is difficult to treat children equally because of the nature of assets attached to real estate, life insurance It can be an option to create liquidity and equal inheritance between siblings. If life insurance is not an option, intra-family loans are another option so that a sibling who gets a smaller amount can get the full amount in time. Alternatively, updating beneficiary designations in retirement accounts might make sense, if available.
Every family’s situation is different. We encourage discussions with an estate planning attorney or wealth planner to ensure that your estate planning documentation matches your wishes and to address the issues raised in this article. for you financial consultant He can also help guide these more difficult conversations with other generations, if necessary, or he can offer advice on how best to deal with these issues to avoid resentment and disagreements between your loved ones after you are gone.
Tracy A. craig He is Partner and Chairman of Seder & Chandler’s Trusts and Estates Group. She focuses her practice on estate planning, estate management, prenuptial agreements, guardianship and guardianship, elder law, and charitable giving. They work with individuals in all areas of estate and gift tax planning, from estate planning and business succession planning to sophisticated, lifelong gifting techniques such as grantor-held pension funds (GRATs), willfully defective donor trusts, and limited liability companies. Family and eligible businesses. Personal Residence Trusts (QPRTs). Tracy works in various fiduciary positions, including Trustee and Personal Representative (formerly Executor). She also works with clients on issues facing the elderly.
Emily Parker Beckman He is a wealth planning advisor at CI Eaton Private Wealth in Boston. She works with clients and their advisors to develop and implement estate planning, wealth transfer, and charitable planning strategies. Prior to entering the wealth management field, Emily spent 10 years as a practicing trust and estate attorney, assisting clients and generations of families with estate planning, estate and gift taxes, probate law, probate avoidance, estate and trust management, and philanthropy specializing in estate planning for people with disabilities. Disability, guardianship and custody matters, long-term care planning and other matters relating to Seniors Act.