How to Handle Estate Planning for Multigenerational Living Arrangements
When multiple generations live on the same property, issues over ownership, who inherits what and who provides what can get complicated fast.


Many people today live in multigenerational homes, where children, parents and sometimes grandparents cohabitate. With multiple generations in the same home, complicated issues can arise. Increased real estate costs, increased childcare costs, increased nursing home costs, increased remote work opportunities and COVID changing the work and schooling landscape have all resulted in more multigenerational households.
These living situations can create questions, such as if a grandparent pays for an in-law apartment on their child’s property, who owns the property; or, if an adult child living with elderly parents contributes to updates on the property, toward maintenance or provides caregiving services to the elderly parents, should this result in an unequal inheritance? All of these questions can be addressed in estate planning documents to help with family harmony.
Who owns the property: Anticipating future problems
Depending on who lives in the home, the first question we suggest considering is how the property should be owned. Should title be taken jointly, as tenants in common, with a life estate, in trust, as a family partnership or otherwise? Which family members should be permitted to live in the home? How does the title affect how other heirs receive a share of an inheritance? How will utilities, maintenance, repairs and capital improvements be paid for now and in the future?

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Many families choose to use a trust to detail all aspects of use and ownership concerning property. The trust can include language regarding right of first refusal language governing who has priority to purchase the property upon a parent’s death, equalization language between beneficiaries to take into account gifts to certain family members during life and tax provisions to ensure beneficiaries pay applicable taxes equally or proportionally.
The trust can manage funds to cover various expenses related to the real estate, as well as detail the management and use of the real estate tailored to the needs of the specific situation of the family.
The incapacity or death of a family member and what will happen for future generations can also be handled in the trust. This level of detail can be incredibly powerful when dealing with multigenerational shared real estate purchases and use, as well as addressing the estate planning component of this and how the property can be used in the future.
Alternatively, using an LLC or partnership often allows for easier fractional ownership of a property among various family members and provides for management of shared use. LLCs can also help with asset protection and, potentially, privacy.
An LLC operating agreement determines which members will be in charge of the daily operation of the property, payment of expenses and how the ownership interests are divided. Intrafamily loans can be leveraged to make improvements on the property, and the partnership agreement can address many different scenarios for a family should an issue arise.
There are administrative costs to setting up an LLC to be mindful of — a registration fee to your state, the legal fees associated with creating an LLC operating agreement and potentially annual tax returns.
If a trust, LLC or partnership agreement is not used, some families create Use and Maintenance Agreements to dictate the terms of use of a property to avoid future disputes; these agreements can encourage upfront conversations about the use of the property, including time of the year when the property may be in high demand, how to split various expenses and capital improvements and how to navigate any other problems that may arise due to joint use of the property.
Who provides the care, and who inherits the property?
If one child provides care for an aging parent, or a grandparent cares for grandchildren regularly, should this be monetized and factored into the estate plan somehow? Will those individuals providing extraordinary care to other family members be compensated somehow? Should the value of the real estate be used for this purpose?
This is an area that can be fraught with peril for many families. There is no one right answer to this question, however. How each family chooses to deal with this situation depends upon family dynamics and what is right for each particular family.
Oftentimes, a sibling or other family member that does not help provide care might be upset if they receive less of an inheritance. If it will be difficult to treat children equally due to the nature of the assets being tied up in real estate, life insurance can be an option to create liquidity and to equalize inheritances between siblings. If life insurance is not an option, intrafamily loans are another option so that the sibling receiving less can be made whole in time. Alternatively, updating beneficiary designations on retirement accounts may make sense, if available.
Every family’s situation is distinct. We encourage discussions with your estate planning attorney or wealth planner to ensure your estate planning documents match your wishes and address the issues raised in this article. Your financial adviser can also help guide these more difficult conversations with the other generations, if necessary, or can provide advice on how best to deal with these issues to avoid resentment and disagreements among your loved ones after you are gone.
Tracy A. Craig is a partner and chair of Seder & Chandler's Trusts and Estates Group. She focuses her practice on estate planning, estate administration, prenuptial agreements, guardianships and conservatorships, elder law and charitable giving. She works with individuals in all areas of estate and gift tax planning, from testamentary estate planning and business succession planning to sophisticated lifetime leveraged gifting techniques, such as grantor retained annuity trusts (GRATs), intentionally defective grantor trusts, family limited liability companies and qualified personal residence trusts (QPRTs). Tracy serves in various fiduciary capacities, including trustee and personal representative (formerly known as executor). She also works with clients on issues facing elders.
Emily Parker Beekman is a Wealth Planning Advisor at CI Eaton Private Wealth in Boston. She works with clients and their advisors to develop and implement their estate planning, wealth transfer and charitable planning strategies. Prior to entering the wealth management field, Emily spent 10 years as a practicing trusts and estates attorney, where she assisted clients and generations of families regarding estate planning, estate and gift taxes, probate law, probate avoidance, estate and trust administration, philanthropy and specialized in estate planning for disabled persons, guardianship and conservatorship matters and long-term-care planning and other elder law matters.

Tracy A. Craig is a partner and chair of Seder & Chandler's Trusts and Estates Group. She focuses her practice on estate planning, estate administration, prenuptial agreements, guardianships and conservatorships, elder law and charitable giving. She works with individuals in all areas of estate and gift tax planning, from testamentary estate planning and business succession planning to sophisticated lifetime leveraged gifting techniques, such as grantor retained annuity trusts (GRATs), intentionally defective grantor trusts, family limited liability companies and qualified personal residence trusts (QPRTs). Tracy serves in various fiduciary capacities, including trustee and personal representative (formerly known as executor). She also works with clients on issues facing elders.
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