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3 Generations Under 1 Roof

When an extended family lives together, you need a plan to manage costs and keep everyone happy

IN NO TIME AT ALL, it seemed, Ivy Vann and Hugh Beyer went from being empty nesters to having their nest overflowing with family members. When Hugh's father died, the couple invited his mom, Molly, to come live with them. A few years later, their son and his wife moved into an apartment on the third floor of the family's large Victorian home in New Hampshire. "They thought they would stay for two weeks," Ivy says, "but it ended up being 18 months, and we were very sorry to see them go."

The Vann/Beyer family is by no means an isolated case. The well-publicized boomerang phenomenon—adult children returning to live with their parents—is running headlong into another trend: parachuting parents. Between 2008 and 2011, the number of parents living with an adult child climbed nearly 14% to 4.6 million, according to AARP. That's in addition to the 24 million adults between the ages of 18 and 34 now living with their parents, according to the U.S. Census Bureau.

The boomerang phenomenon—adult children returning to live with their parents—is running headlong into another trend: parachuting parents.

Like many families, the Vann/Beyers say they couldn't be happier being surrounded by people they love. Yet even in the best cases, multigenerational homes pose financial and social challenges that are best addressed at the outset, says Bill Hunter, head of strategy for Retirement Client Experience at Merrill Lynch. "Often, the desire to spend time with family is just one motivation—there's also the need for financial support or caregiving," says Hunter. To help ensure your happiness—and theirs—consider these things.

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You may be willing to trade a little privacy for the benefits of having the gang under one roof, but will they all be happy in your home? Your kids will likely be pretty self-sufficient and able to address their own needs, but parents may be a different story.

Forty percent of America’s homes are 60 years old—or more. These homes, built in 1969 or earlier, reflect yesterday’s demographics. They were built with yesterday’s families in mind: a pair of parents and their average of 2.5 kids. What was important to these families? Living near the kids’ school and somewhere that provides the parents with a manageable commute to work. But a different balance might be needed when you’re trying to accommodate the needs and lifestyles of three generations in one home. The oldest generation may face boredom, isolation and other challenges with health. That’s why, when choosing a home to suit everyone’s needs, you might want to consider the availability of health-care services, transportation, support services, and whether all generations will be able to enjoy the leisure activities in and around their home.

Is Your House a Tight Fit?

If the old homestead doesn't fit your needs, an addition or even a new, larger house that suits the entire family may be the solution. Either fix may require a loan. "If you decide to remain in your house, this would be a good time to have a serious talk about how long you plan to stay there, as that could affect the type of loan that ends up being the best solution for you," notes Kathy Ciaffa, director of first mortgage pricing and fee management at Bank of America. And if you decide to purchase a new house, you might look into approaches that let you put little or no money down, she says, to avoid selling well-performing investments or incurring capital gains taxes.

Should You Charge Rent?

Serving as landlord can be tricky, particularly when it comes to your adult kids. If you plan to charge rent for an extended stay, you may avoid raising hackles by being open about your own costs, and why and how much you expect them to contribute.

If they've never owned their own home they may not realize how high such expenses as maintenance, insurance, mortgage payments and property taxes can be. Decide early which costs adult relatives will chip in on. They may help with such basics as food and general living expenses or even a renovation project. The Vann/Beyers, for example, agreed that Molly would foot the bill for the bedroom and bathroom renovations necessary to help her to live comfortably.

What If Circumstances Change?

Think about current out-of-pocket costs as well as what might be in store down the road, Hunter says. "Even a self-sufficient parent may need some at-home care in a few years," he explains. "At some point you may also need to modify your home, such as by adding a ramp or railings."

But even considering these expenses, combining your household with your aging parents’ may be more economical than other options such as assisted living and nursing care facilities. The national median daily rate for a private room in a nursing home is $267, according to a 2017 survey by Genworth.

"Ideally, you'll live together comfortably as one big happy family, but you don't always know what life has in store, so put together a contingency plan," Hunter says. The sweetheart deal on rent you gave your son while he was looking for a job might need to be revised now that he's found work and is earning a steady paycheck.

Becoming familiar with home health aide services and assisted-living facilities in your area is also a good idea, in case a parent's health takes a turn for the worse. Keep in mind that some supplemental Medicare policies have six-month residency requirements, which means that your parent may not be covered immediately after a move to a new state. Long-term-care policies also vary. Some may compensate family members serving as caregivers, while others cover only institutional care.

When Molly was diagnosed with Parkinson's four years ago, Ivy Vann gave up her part-time job to focus on Molly's needs. Ivy emphasizes the importance of having the right financial resources to ease the strain. "Money can't buy love, but it sure can buy a housekeeper, the caretaking help you need and the wherewithal to create a living space appropriate for your loved one," she says. In January 2015 the family added six hours of paid caregivers five days a week, a system that allowed Molly to remain at home until her death in February 2016.

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