Are you thinking of moving close to your child’s home? Close…as in an in-law apartment or addition?
Many people in their later years decide to downsize and give money to an adult child for building an addition onto the child’s home.
Sounds like a good plan, right? Your child can more easily take care of you as your needs change with time. You can count on care, they can count on you being cared for. And they won’t have to travel to help you out.
Although contributing money for this type of arrangement isn’t for everyone, in many cases, it’s the perfect solution. And it’s even more successful if there is a written life use agreement or caregiver contract that spells out all the details.
Why is an agreement necessary?
I know a legal document between you and your child is not a pleasant thing to think about. But it’s a matter of protection. Consider the consequences of the answers to these questions:
- What happens if your child must sell their home and relocate?
- What happens if you decide you would like to move to an assisted living facility and need some money back from the child to pay rent?
- What happens if you have a falling out with your child?
- What happens if your child divorces?
- What happens to your interest in the child’s home when you die or your child dies?
- Could your child evict you?
- Is the money you have given the child a gift?
- Will the money given to the child be considered an advance of the child’s inheritance?
- Will gifted money create issues down the road if you need long term care in a skilled nursing facility?
All of these questions can be answered and resolved by having a formal written agreement with your child. The agreement would outline
- your ownership interest, if any
- what your contributions to expenses will be
- what would happen if either party needed to change the arrangement
Many of my clients have life use and caregiver agreements, and they are enjoying their lives amongst children and grandchildren. And they are protected.
If you are considering paying for or contributing to your child building an addition onto their home for you, be sure to do it right – for everyone involved. Give us a call, as Connecticut elder law and estate planning attorneys, we can help you put it all in writing.