Family Matters: is it a good idea for multiple generations to live together?

Life expectancy has increased but so has the cost of care fees which may need to be paid over a much longer period than ever before. The housing market remains unpredictable and any move brings with it high costs (both in selling the home and purchasing a new one). There are also many who wish to keep hold of the family home as an asset to pass down to future generations, while wanting to remain living in the home for their lifetime.

Younger generations may not be able to afford a new home of their own to accommodate their growing family; there are stricter lending criteria, uncertainty in employment, and high stamp duty rates. By living together as one unit, care at home can be provided, while preserving an inheritance to pass down to future generations. Brave grandparents may also volunteer to help with childcare for any grandchildren! Religion and cultural norms are often a strong factor in families living together.

Having a combined family home which caters for several generations can keep living costs down, allow family members to pool resources and provide an invaluable support network for all ages.

Multi-generational living can therefore be an attractive option for many. Property development programmes and magazines often focus on how to make our living spaces appropriate and comfortable for multi-generational living. But it is equally important to get specialist legal and financial advice to ensure that any pitfalls further down the line can be avoided.

At Thackray Williams we have wide experience in advising different members of the same family, across the generations as to what they should consider. These include:

• What would happen if any family member lost mental capacity. This includes both the older and younger generation, as loss of capacity can occur at any stage of life. The family finances will be tied together and therefore it is vitally important that you have a plan in place to enable somebody to manage the finances should the worst happen.
• For a younger couple moving in with their parents, the parents may insist upon a co-habitation or pre-nuptial agreement to agree in advance what would happen in the event that the relationship broke down.
• Recording the ownership of the equity in the property. It may be the case that each adult is to have an equal share of the property. Alternatively, one party may have contributed more towards the purchase, or towards an extension which may increase the value of the home. In such a case the percentage shares could be split to reflect that inequality of contribution. A Deed can be drawn up in order to record the equitable ownership of each family member. In the absence of such a Deed the law would assume an equal split.
• Having recorded everyone’s equitable shares in the property, it is hugely important that each family member gets full and comprehensive advice regarding their Wills and Inheritance Tax position. Each Will should be drafted to try and maximise inheritance tax allowances and reduce the tax bill. For older clients who might have one child living under the same roof and another child who lives independently, the clients will often want to ensure that the children are ultimately treated equally in their Wills. This requires careful thinking through and drafting.