Piece Two Homes Together Into One

Barbara Williams’s home is a lively one. Much of the year, there are four generations under one roof. Williams, age 65, shares her five-bedroom Silver Spring, Md., home with her husband, daughter, son-in-law and three young grandsons—and her 91-year-old mother visits for several months at a stretch.

While the multigenerational living arrangement may be messy at times, “we had so many reasons to do it,” says Williams, a retired editor of scientific journals. It not only saves money, she says, but lets her watch her grandkids grow up, allows her to split household chores with her daughter, and reduces the stress of long-distance caregiving for her mother. “Even though there’s more work to do,” she says, “doing it together makes everything easier.”

Williams and her family are among the growing number of Americans forming multigenerational households—those that include two or more adult generations, or grandparents and grandchildren. Although many people initially turned to multigenerational living to save money during the Great Recession, the arrangements have become even more popular as baby boomers and their parents age. A record 60.6 million people, or 19% of the U.S. population, lived in such households in 2014, up from 51.5 million in 2009, according to a recent Pew Research Center analysis.

From just $107.88 $24.99 for Kiplinger Personal Finance

Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues

CLICK FOR FREE ISSUE

Sign up for Kiplinger’s Free Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

“You put more people under one roof, and that’s going to save a lot of money really quickly,” says John Graham, professor emeritus at the University of California Irvine’s business school and co-author of Together Again: A Creative Guide to Successful Multigenerational Living (M. Evans, $17). But the biggest advantage, he says, “is the interpersonal and social benefit of having family members close by and helping one another out.” The arrangements can relieve the isolation often suffered by seniors living alone, offer the reassurance of having caregivers close at hand, give grandparents an opportunity to pass down family traditions to their grandchildren, and give parents a helping hand in caring for young children.

Meanwhile, “you’re modeling what the next generation will do with their grandchildren and how they’ll treat you—the parents—when you’re older,” says Susan Newman, a social psychologist and author of Under One Roof Again (Lyons Press, $17), a book about multigenerational living.

But even the happiest of multigenerational homes face challenges. Every family member needs to maintain his or her privacy and respect boundaries. Housework and expenses need to be divided in a way that feels fair to everyone. Ownership of the house itself must be structured in a way that doesn’t sabotage a senior’s estate plan. And any home renovations or new homebuilding projects must comply with local zoning laws—which often restrict the very features most desired by multigenerational families, such as multiple entrances or separate kitchens.

Multigenerational living, of course, is nothing new. In 1950, 21% of the population lived in multigenerational households, according to Pew Research. But that figure plummeted to a low of 12% in 1980. In the past 50 years or so, Americans “adopted this crazy idea of a nuclear family,” Graham says. But the interdependence of the extended family, he argues, is “the natural way people have always lived.”

Talk It Out

Before Mom moves in with you (or vice versa) hold at least one family meeting to discuss each person’s expectations, set ground rules and hash out financial issues. Will this living arrangement be permanent or temporary? If it’s temporary—perhaps an adult child is living with you while he saves money for his own house—make your expectations clear, says Donna Butts, executive director of Generations United, a nonprofit group that promotes intergenerational collaboration. The adult child might think that saving 10% of his salary is adequate, Butts says, but the parent might think he should save 80%.

Be realistic about whether you can all survive peacefully under one roof. “Don’t expect somebody to change just because they’re moving in with you,” Butts says. “If someone is a slob or a neat freak, they’re going to stay that way.” If you’re unsure about whether you can all get along, run a short-term experiment. You might go on a long vacation together and see how that works, Graham suggests.

Set some ground rules that help everyone maintain privacy and autonomy. Will you eat dinner together every night or just a couple of nights a week? Will you always take vacations together? Can Grandma have a boyfriend over without raising eyebrows? If there are young children in the house, who will take the lead parenting roles? And do those people have consistent approaches to child-rearing?

Divide the housework, lawn maintenance and other chores. One democratic way to do this: Make a list of all the chores, pass it around, and ask everyone to put his initials next to what he wants to do. “It seems to work because people have had a choice,” rather than being told what to do, Newman says.

If there will be seniors in the house who need care, discuss who will do the caregiving. If there are adult siblings not living in the house, involve them in the discussion, too. Most of the caregiving burden may naturally fall on the adult child who’s living with the parent, but siblings living nearby could take the parent to doctor appointments or invite him or her along on vacations. Also discuss whether caregivers will be compensated. If so, you’ll need a “personal care agreement”—a written contract outlining the services to be provided and the amount of compensation the caregiver will receive. “If you don’t define upfront what, if any, compensation there’s supposed to be, invariably there’s a dispute after Mom passes away,” says Bernard Krooks, an estate planner in New York City.

Divvy up the household bills, perhaps using a budgeting tool, such as Mint.com, to help track expenses and divide them fairly. “Allow your parents when they’re moving in to contribute in some way if they can, because they then feel they are part of the family and have some ownership of the living arrangement,” Newman says. If there are family members who can’t contribute financially, discuss other ways they can pitch in. An adult child who is out of a job, for example, might take care of all the yard work.

Whether you’re buying a new house, renovating an existing one or simply moving Mom in with you, discuss whose name will be on the deed. If Mom is putting a lot of money into renovations or paying for the addition of an in-law suite, it may seem natural to add her name to the deed. But that can be a bad idea. If Mom later goes into a nursing home and relies on Medicaid to pay the bills, Medicaid could put a lien on the house to recover its costs after she dies.

A better idea, Krooks says, would be for Mom to purchase a “life estate” in the adult child’s home, which gives her the legal right to live in the house for the rest of her life. That interest would automatically end at her death. The life estate protects Mom from being evicted in the event of a family feud (such as the adult child’s divorce) and protects assets if Mom ultimately needs long-term care. So long as the purchase price is fair and she lives in the house for at least a year, the purchase should not affect her eligibility for Medicaid. (Typically, transfers of assets made within five years of applying for Medicaid can trigger a period of ineligibility for Medicaid.)

The value of the life estate will depend on Mom’s age and the value of the property. If the life interest is worth 30% of the value of the property and the property value is $500,000, for example, Mom could pay $150,000 for the life estate without affecting her Medicaid eligibility, Krooks says. If the child has owned and occupied the home for two of the past five years, he can exclude up to $250,000 of any gain ($500,000 if he’s married) on the sale of the life estate interest.

If the parent and adult child are buying a home together and Medicaid is not an issue, there are still title issues to consider. If Mom and her son own the house as “joint tenants with right of survivorship,” her son will inherit the house when she dies, no matter what her will says. If Mom and her son own the house as “tenants in common,” however, Mom’s interest in the house will be passed down in accordance with her will.

Housing Options

Private space for each family member, multiple entrances, separate kitchens and plenty of bathrooms to go around: These are high on the list of home features desired by multigenerational households.

Shubber Ali, age 48, bought a six-bedroom house in Novato, Cal., four years ago, anticipating that his 80-year-old mother would soon come to live with him full-time. He and his wife and two children have rooms at one end of the house, while the rooms set aside for his mother at the other end of the house include a bedroom, bathroom, walk-in closet and sitting area. “It feels like it’s almost its own little condo, but it’s still a part of the house,” Ali says.

Perhaps you already have a home ideally suited for multigenerational living. If not, you’ll need to weigh the costs and benefits of renovating your house, building a “granny flat” in the back yard, buying an existing home, or designing and building a multigenerational dream house.

If you’re adding an in-law suite or making other renovations for an aging parent, consider wider doors and hallways that allow space for wheelchairs and other features designed for aging in place. Go to the National Resource Center on Supportive Housing and Home Modification website at www.homemods.org for tips on making your home more accessible for people with limited mobility, vision or hearing.

If you decide to buy a house, you’ll find a growing number of developers offering homes specifically designed for multigenerational households. Homebuilder Lennar, for example, introduced its Next Gen house design in 2011. The homes contain a separate suite with at least one bedroom, bathroom, kitchenette, a door to the main house (lockable from both sides), and in most cases, a separate exterior door. The homes, available in more than 300 communities in 14 states, range in price from about $280,000 to more than $800,000, says Kim Ashbaugh, director of Next Gen brand management at Lennar.

Whether you’re renovating or building a new home from scratch, be prepared for zoning headaches. When Lindsay Grise, age 35, recently purchased land in Johnson County, Kan., she planned to build two homes: one for herself, her husband and two daughters, and a smaller one for her parents, who are both in their sixties. But she soon discovered that the small, unincorporated community had six pages of regulations on “accessory dwelling units.” Sometimes called “granny flats,” accessory dwelling units are smaller dwellings on the same property as a single-family house. In this case, the community rules limit detached accessory dwellings to 900 square feet.

That wasn’t enough space for Grise’s parents, so Grise has moved on to plan B: building one big house, with two distinct sides connected by a hall and a screened porch. Her parents worked with the architect to design their 1,500 square feet of living space, with their own kitchen, pantry, laundry room, guest room and garage. “I just want my parents to feel like this is their house,” Grise says. “They have control over their part of it.”

As multigenerational living becomes more popular, some states and cities are relaxing laws restricting granny flats. A new California law taking effect in January, for example, streamlines parking restrictions and other regulations to make it easier for homeowners in the state to build granny flats. You can find accessory-dwelling rules for many cities across the U.S., along with tips on building your own accessory dwelling, at www.accessorydwellings.org.

After Mom Moves In

Once you’ve unpacked the moving boxes, give the arrangement time to work out. “It will not be ideal immediately,” Newman says. “Adjust and lower your expectations.”

Schedule family dinners at a restaurant every couple of weeks for the first six months, Graham says. There, you can discuss what’s working and what’s not—say, the TV volume, Granddad’s smoking habit, taking out the trash. Holding the conversation in a public place “keeps tempers from flying off the handle,” he says.

Be wary of resuming old parent-child roles, such as nagging your adult daughter to comb her hair or relying on Mom to do the cooking and cleaning. When her oldest son moved back home, Nancy Meyer, age 69, of St. Louis, Mo., says she told him, “I’m tired of doing your laundry. You may do your own.” They made a deal that he had to keep the shared living spaces clean—and he kept up his end of the bargain, she says. This year, her son moved into his own house after living at home for about 10 years. Now, she says, “I kind of miss him.”

Also, maintain your friendships and social activities. If your elderly parents are living with you, it’s easy to feel guilty about heading out to book club or bridge club, Newman says. “Don’t give up your social life.”

Although there may be plenty of adjustments required along the way, many families find that their commitment to multigenerational living only increases over time. “It’s not all perfect,” says Williams, the Silver Spring, Md., grandmother, noting that dirty dishes on the kitchen counter sometimes trigger family tension. “When you have three little boys, you’re sometimes going to have a mess,” she says. But “family affection overcomes that kind of stuff. And we’re committed to staying together at this point. We know we’re going to make it work.”