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The Big Move: My daughter and son-in-law want me to live with them. Should I be worried about unforeseen consequences?

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Dear MarketWatch,

My daughter and son-in-law want me to live with them. I am 75 and widowed; they are around 50. My daughter wants to build a home with two master suites. I have more than enough money for a down payment. They have excellent incomes. They would not want me to pay rent. I pay over $1,700 rent where I live now, and have no ties to keep me here. I keep to myself and am happy alone. They both work full time. I love them and would stay out of their way.

They are very good to me. I have no problem letting them choose the house and decorating it their way. My space would still be my own. And my Social Security would become spending/saving money.

Should I be aware of unforeseen consequences? What are the possible pitfalls? My will provides for a distribution of my financial assets among all of my children and grandchildren.

Sincerely,

Joint purchase with family

The Big Move’ is a MarketWatch column looking at the ins and outs of real estate, from navigating the search for a new home to applying for a mortgage.

Do you have a question about buying or selling a home? Do you want to know where your next move should be? Email Jacob Passy at TheBigMove@marketwatch.com.

Dear Joint,

Multigenerational living among families has seen a resurgence in recent years for myriad reasons. A report from Generations United, a public policy nonprofit, found that the number of Americans living in a household with three or more generations has increased 271% between 2011 and 2021. All told, they estimate that 66.7 million Americans over the age of 18 are living in such a household.

While some families find themselves in these situations out of necessity, many proclaim that there are advantages to this method of living. It can strengthen familial bonds, make finances and childcare more manageable and even can improve one’s health.

It’s wonderful that your daughter is being so considerate of your needs as to suggest that you move in together. This could give you a chance to grow closer with your family, but also has very practical benefits. By living with your family, they may be able to provide you with more assistance as you grow older and eliminate the challenges in lining up health care.

But you’re right to be cautious about rushing into such an arrangement, because for all its benefits it does come with some potential pitfalls that are vital to consider.

Financial fiasco?

While the arrangement your daughter and son-in-law devised certainly has its benefits — it can also present some tricky financial intermingling depending on how you all go about financing the home.

You say your daughter doesn’t want you to pay rent, but you also mention that you have enough money saved up for a down payment. To me, that suggests you might be listed on the mortgage as a joint owner. That might not be a bad idea per se — for instance, you might have a higher credit score than they do, which could net them a better interest rate — but it could complicate the mortgage underwriting process, if the opposite was true about your credit score.

If you are listed on the mortgage, the three of you will need to come up with a plan for if and when disaster strikes. After all, you’re all legally responsible for paying the loan off. So what would happen if your daughter and son-in-law lost their jobs or were in an accident, and suddenly couldn’t pay the mortgage? The last thing you’d want is for a lender to come after your hard-earned savings because the three of you went into default on the loan.

Given how financially tricky such a situation could be, you might want to hire an attorney to draft a cohabitation agreement. These legal agreements are often used when unmarried couples purchase property together.

“The agreement can detail the percentage or amount of each party’s contribution to the purchase as well as outline each parties’ responsibility of expenses and improvements,” Michele Loughrey Tschida, a partner at Minnesota-based law firm Hellmuth and Johnson, wrote in a blog post. The agreement can also outline what would happen if you all chose to sell the home, or how your share of the home would be passed on if you were to die.

Where there’s a will…

Speaking of what happens when we die — it would be a good idea to loop in your other children on this plan. You don’t necessarily need to seek their approval, but you’ll want to nip in the bud any potential misgivings. After all, your other kids might be thinking, “Is Mom giving my sister part of my inheritance?”

You should plan to account for this in your will and update it accordingly with your estate attorney. Since you will have funded the down payment of the home, would this come out of your daughter’s inheritance? How might you distribute other assets in light of this arrangement?

At the very least, you’ll want to determine whether your share in the home will pass to your daughter and son-in-law fully. Otherwise, they may find themselves in a position where they would need to buy out your other children’s interest in their home to be able to own it outright.

Manage expectations

Aside from the financial foibles to consider, there are the practical aspects of cohabitating with someone. It seems like the home you’re envisioning will offer all three of you a degree of privacy, but I’m sure there will be common space — and expectations that come with it.

Because you’re retired, and your daughter and son-in-law aren’t, will they expect you to take on more of the tasks around the home like cooking and cleaning? Will they expect all three of you to engage in evening activities together, like watching TV or playing cards? Will you share groceries, or fend for yourselves?

Think of it this way: This arrangement is really no different than having a roommate. It sounds like you’ve lived alone for a while, so you might not be prepared for the little frustrations that come from sharing a home with someone else. The last thing you’d all want is to devote so much time and money to building a home together, only to find out you’re not compatible co-habitants.

Perhaps you could spend some time staying with your daughter to get a sense of how your routines mesh and whether you’d enjoy each other’s company. At the very least, I would suggest that the three of you engage in frank and thorough discussions about what your expectations are — and keep those conversations going even after you’ve moved in together. That way this arrangement truly can be beneficial and enjoyable to everyone.

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