Tips and traps when moving in with your children

The Australian Bureau of Statistics tells us that 6.9% of people aged 65+ already live with their children. No doubt many more are actively considering it as an option, but before making the move it’s important to consider the pros and cons.

The reasons for moving in with children may vary widely. It could be a financially based decision, helping one or both parties to consolidate their cost of living. For others it may be due to the adult children deciding to offer care for a parent with a physical impairment or illness. On the other side of the coin, it may be driven by the adult children needing the assistance of retired parents in taking care of grandchildren. Think back to the hilarious movie (pictured), Parental Guidance

While there are some obvious benefits to sharing living costs and improving family connections, there are some issues and difficulties that may not be so apparent at the outset. Here are some handy hints on what you need to consider to help make it a success.

The danger of making assumptions
The concept of moving in with your children may happen in a number of ways. You might offer to use your own money to build a granny flat on their property or to make renovations or extensions onto their home to accommodate you. Another scenario is for both parties to sell their homes and buy a new property together, which is better suited to shared living.

While these arrangements may seem fair and practical for both parties it is vital that great care is taken to protect your financial stake in the venture. While things may start out rosy, the reality is that there can be conflicts, misunderstandings, divorce or other family disruptions that can put your financial contribution at risk if things are not spelled out clearly at the outset.

Imagine if the child you move in with ends up in an acrimonious divorce. The property settlement may involve the need to sell the home and if there is no documented evidence of your stake in the ownership, there could be a risk of you losing your money or having to go through legal action to reclaim it.

Make sure there is an agreement in writing
Any arrangement that involves a large amount of money or the exchange of property needs to have a written agreement drawn up. It doesn’t matter how good the family relationship is or how much trust exists, it is simply a matter of practicality. A written agreement does not indicate a lack of trust, but simply makes it clear to both parties what the expectations are. It brings clarity and prompts both sides to more fully consider all future possibilities.

Putting things in writing will naturally help everyone to look at things objectively. Once it is in writing and signed by both parties then there is a basis for impartially sorting out future eventualities and a clear reference for any possible legal claims.

Obtain your own legal advice
Getting legal advice on the written agreement can help uncover issues you may not have considered and will help to express the spirit of the agreement in concrete and unambiguous terms.

In doing this, however, don’t simply rely only on one side making the legal arrangements. You should enlist your own legal adviser who you consult separately and privately to ensure your needs and wishes are properly reflected in the agreement. This may seem pedantic at the time, but can prevent a lot of heartache down the track if the unexpected happens.

Some of the major areas that an agreement should cover:

  • What will happen if relationships change, such as you or your children going through divorce or starting new relationships?

  • What is the nature of your financial contribution? Is it a gift or a loan? Should the property title be changed to recognise your shared ownership?

  • How will you be compensated if you change your mind and want to move out? How will financial interests be calculated?  

  • What will be done financially and practically if your health deteriorates and you need extra care to stay in your shared accommodation or if you need to move to residential aged care?

  • If there are other children outside of the agreement, how will their inheritance be affected by the agreement? Is there a need to adjust wills to reflect the desired outcomes?

  • Is there an expectation of personal care being supplied by the child as part of the agreement? How will this be dealt with if your personal needs change or increase in the future? 

Your pension may be impacted too
If you are receiving a pension, the written agreement may also be important for the purposes of calculating your pension entitlements. Centrelink have specific rules on granny flat arrangements that need to be taken into account. More information on this can be found at their website.

What should you do if disputes do occur?
It is important to get prompt legal advice as soon as any disagreement arises. Any delay may reduce your ability to protect your legal interests. Sharing accommodation with children can have many mutual benefits, but planning is essential to make it a successful move.

*Australian Bureau of Statistics Report - Reflecting a Nation: Stories from the 2011 Census, 2012–2013

Do you feel that shared accommodation is a workable alternative? Tell us your thoughts.

Feature image: © Twentieth Century Fox Film Corporation and Walden Media, LLC.

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