Back to the Future: Living with Your Adult Child

The kids are out of the house, your office building is a faded memory, and you've got lots of time and space all to yourself. Those are some of the purest joys of retirement. But a sudden change in circumstances could have you considering whether to live with one of your adult children once again.

It might be the death of a spouse, mounting medical and household expenses or a disability that has you mulling over an invitation to move in with one of the kids. Or maybe a job loss or a divorce brings the kid to your doorstep with suitcases in hand and boxes in the trunk of the car.

Yan Ross, an attorney who shares his Arizona home with his wife and 89-year-old mother-in-law, says living arrangements like his are still much more common than when an adult child moves in with a retiree. But he can see a future where more middle-agers might be seeking shelter with their parents.

"I suspect that with the direction the economy has been taking, it will become a more common situation," says Ross, co-manager of Boomers and Elders, a Cave Creek, Ariz., financial planning service for seniors and adult children with aging parents.

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Whether you or your child is making the move, follow these six tips for the financial and emotional survival of your blended household.

1. Share expenses fairly
One of the first things you'll need to do is agree on how much the newcomer in the household will contribute to paying grocery, utility and other bills. What's fair may be tempered by each person's financial means, but it's important to get this issue settled up front -- and it's probably a good idea to get it in writing. An attorney or financial adviser may be able to help you draw up a document.

"We prepare what's called an expense sharing agreement, and we list what expenses are going to be shared and in what percentage," says Jan Warner, a partner in the law firm of Warner, Payne & Black in Columbia, S.C., which specializes in elder law.

Leave property taxes and mortgage payments off the list, because those are not affected by how many people live in the home, he advises.

2. Sort out renovation financing
Beyond everyday household expenses is the matter of upgrading the home to accommodate physical limitations or simply to add needed space. Warner has had many cases in which the sale of the retiree's home helped to pay for the changes. Other clients have funded the construction by purchasing a life interest or term interest in the child's home. This arrangement, also known as a life estate, gives you the right to occupy your child's home for as long as you live, or in the case of the term interest, for a specified period that does not exceed your life expectancy.

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