Multi-Generational Living: Is This a Good Idea?

Q: I read your article on multi-generational living and found it incredibly interesting. My family and I are planning a similar multigenerational living arrangement by adding onto my parents’ house. We are located in Colorado and hoping to find both a financial advisor and a real estate attorney to guide us through the process. Can you give us any insights on what we should be thinking?

A: Before you start spending money on an attorney or a financial advisor, you need to think through what you want to do, how you’re going to do it, and who is going to finance it. What you’re talking about entails a significant amount of time and treasure and can make life difficult if there are other family members who might be concerned about a someday inheritance..

Certainly, you have a possible location for your multi-generational home – your parents’ house. However, the first question you should ask is whether the renovated home will meet everyone’s needs now and in the future. You’re already planning an addition for your family, but consider that you may also need to make changes to the home to accommodate your parents as they age.

Multi-Generational Living: How will this work?

You need to start this process by conceptualizing how you and your parents would live together. Will local zoning and building regulations allow you to expand the home? If so, by how much? Is that enough to add on a first floor bedroom and bathroom for your parents? Will you also need a space for an outside caregiver? Or to widen doors and reconfigure areas to allow for wheelchair access, if it’s required someday?

These questions need to be answered early in the planning process. If local zoning codes won’t permit you to expand or change the home as you’d like, you may need to rethink staying in this home and find a different location.

Once you’ve determined that you can proceed with your general concept of expanding, reconfiguring or changing the home can work, you’ll need to get a general idea of what it will cost. You might find that you’re able to add onto the property, but doing so will be prohibitively expensive. Or, the end result will create a white elephant of a property that’s unsalable in the current neighborhood.

Legal Ramifications of Multi-Generational Living

Once you determine that your local laws allow you to modify the home as you’d like and those changes are within your budget, you can start planning the work. You’ll need a good contractor and possibly an architect, depending on the level of work. You should also have a good estate planning attorney. Discuss how you’ll share expenses for the home. Will your contribution warrant an ownership stake in the property? You should also discuss what happens to the home when your parents die.

You also need to document the arrangement you’ve come to. This might be a partnership or you may be able to get it done with wills, living trusts or other documents. This might sound like overkill, but if you have siblings, it would be prudent to have it all in writing. Things happen and you don’t want to be in a situation where you’re caught unprepared and your siblings start pointing fingers.

In terms of finding a good team, you’ll want to talk to friends and relatives for good recommendations on attorneys, financial planners and contractors. You could also speak with a local real estate agent, if you or your parents know one, and ask for referrals. Make sure you check references and check out any complaints online. If you’re still stuck for recommendations, then talk with your tax preparer and neighbors who have had work done recently.

Good luck.

Your Multi-Generational Living Checklist

Make sure you consider all of these aspects for a successful multi-generational living situation:

Space and privacy needs. Living together requires balancing communal areas with private spaces. Consider how to allocate bedrooms, bathrooms, and personal areas. Think about soundproofing and creating designated quiet zones to respect everyone’s need for privacy and solitude.
Financial arrangements. Determine how expenses will be shared. This includes rent/mortgage, utilities, groceries, and shared purchases. Establish clear agreements on financial contributions and consider setting up a shared household account for common expenses.
Household responsibilities. Divide chores and maintenance tasks fairly. Create a system for sharing responsibilities like cooking, cleaning, and yard work. Consider each person’s abilities, schedules, and preferences when assigning tasks.
Decision-making processes. Establish how household decisions will be made. This could involve regular family meetings, voting systems for major decisions, or designating specific areas of responsibility to different family members. Ensure all adults feel their voices are heard.
Cultural and lifestyle differences. Address potential conflicts arising from different generational values, cultural practices, or lifestyle choices. Discuss expectations around issues like noise levels, guests, meal times, and personal habits. Foster an environment of mutual respect and compromise.

Additional Multi-Generational Considerations

Health and caregiving needs. Consider current and future health needs of family members. Discuss expectations around caregiving responsibilities, especially for elderly family members or those with chronic conditions. Plan for potential home modifications to accommodate changing mobility needs.
Legal and property ownership issues. Consult with a lawyer about property ownership, inheritance plans, and legal protections for all parties. Consider drawing up formal agreements to protect everyone’s interests, especially if multiple parties are contributing to property purchases or improvements.
Conflict resolution strategies. Develop a plan for addressing disagreements before they arise. This could include designated mediators, cooling-off periods, or agreed-upon steps for resolution. Emphasize open communication and mutual respect in resolving conflicts.
Long-term plans and exit strategies. Discuss how long the living arrangement is expected to last and under what circumstances it might change. Have honest conversations about future plans, including potential moves, career changes, or family expansions that could impact the living situation.
Impact on personal relationships. Consider how multi-generational living might affect relationships with spouses, children, and other family members. Discuss strategies for maintaining healthy boundaries and ensuring quality time for nuclear family units within the larger household.

Multi-Generational Living: Is This a Good Idea?