Due to the high cost of living, today, more young adults boomerang, move back home with their parents than at any time since the 1940s. Most adult children who still live at home have plans to move out at some point. However, if one or both of their parents die prior to that time, without addressing the adult child’s living situation in their estate plan, legal issues can ensue.
Boomerang Kids & Probate
Update your estate plan every 3 to 5 years. What’s more, if you have an adult child who still lives at home or recently had an adult child move back in with you, review the plan and make any necessary changes. Doing so is the only way to ensure that the court adequately addresses your wishes.
Most Boomerang kids say the decision to live with Mom and Dad was motivated by the following financial reasons:
- Saving money (41 percent)
- Inability to afford to live on their own (30 percent)
- Paying down debt (19 percent)
- Recovering from emergency costs (16 percent)
- Losing their job (10 percent)
Boomerang Children and Estate Planning: How to Avoid Probate
The phenomenon of the not-so-empty-nest raises questions that should be addressed in an estate plan. Avoiding probate might be a desirable goal. However, it should be weighed alongside other potential outcomes of co-ownership. For example, consider capital gains tax implications if the property is later sold. Also, think about gift tax that may be due because the surviving parent is gifting a partial ownership in the home. Finally, don’t forget about potential creditor claims of the child’s creditors. To avoid probate, the parents may consider creating a trust to own their interest in the home. Also, in addition to their other accounts and property, they can utilize an enhanced life estate deed or transfer-on-death (TOD) deed for their home.
Adult Child as Tenant: True Boomerang Scenario
The likelihood of an adult child living at home and paying rent to their parents is not trivial, as it can determine the child’s status as a tenant or guest. Tenants have legal rights under landlord-tenant laws. If there is a written or even a verbal rent agreement between parent and adult child, the child may be considered a tenant, granting them certain legal rights and protections, and therefore it might not be possible to just kick them out. An adult child who is a legal tenant would have the right to an eviction process that involves a court hearing.
Whatever your family situation, careful planning can ensure that your intentions are made clear, your loved ones are properly taken care of, the potential for conflict is minimized, and your estate is taxed as little as possible. To create or update an estate plan, please contact our office and schedule an appointment.
About Skvarna Law Firm in Glendora and Upland, California
Skvarna Law Firm operates offices in Glendora and Upland, California. We provide legal services. We cover San Bernardino, Los Angeles, Orange, and Riverside Counties. This includes several cities. Upland, Ontario, Rancho Cucamonga, Fontana, Colton, Rialto, Chino, Chino Hills, Glendora, Claremont, Pomona, La Verne, Montclair, San Dimas, Azusa, Covina, West Covina, Diamond Bar, Walnut, La Puente, Corona, Norco & Mira Loma. Visit SkvarnaLaw.com to learn more.
