How to make a success of living with three generations together under one roof
Living with multiple generations together under one roof may seem more akin to Victorian times than life in the 21st century, yet this trend is on the rise.
According to figures from the Office for National Statistics, there are now an estimated 419,000
households where three generations of the same family are living in the same property, up from an estimated 325,000 in 2001. Typically, this consists of elderly parents cohabiting with their children and grandchildren.
Separate new findings from Barratt Homes also show an increase in multi-generational and extended family living, with one in four households currently comprising non-immediate family members, such as grandparents, under one roof.
Many families have been driven to this by economic necessity. With the cost of food and other living expenses continuing to rise, banding together to share these outgoings has become increasingly appealing.
Patrick Connolly, a certified financial planner at adviser Chase de Vere, says: “Hikes in the cost of living, property and education – coupled with the high cost of both childcare and care for the elderly – mean it is very likely we will see more three-generational homes in the future.”
The key benefit of multi-generational living is the fact it enables cash-strapped families to pool resources and distribute both time and costs more economically.
It can enable parents of young children to enjoy bigger homes than they could afford by themselves, while also allowing them to take advantage of free childcare on tap from grandparents.
In addition, frail elderly relatives can get a helping hand from younger family members, meaning they don’t have to go through the expense and emotion of having to go into care. They also get a lot more companionship.
Liz Fraser, panellist for the Scottish Widows think tank, Centre for the Modern Family, and author of several parenting books, says: “The major benefits of being in a multi-generational household include help with living costs, as well as help with childcare costs. But on top of this, all three generations get the chance to spend more time with family members.This can help to build stronger family relationships.”
Property expert Sarah Beeny has even called on the government to give tax breaks to families where there are three generations living under one roof to help avoid a social care disaster.
But while all of this may sound very positive, there are many downsides to having three generations cohabiting in the same property.
Family members can end up living on top of one another and have a lot less space and privacy.There can also be tensions when old and young attempt to live side by side, as well as issues trying to organise the finances fairly.
Fraser adds:“Multi-generational living is often not easy given the day-to-day stress of family life and work.While some families seem to make it work, for others it can be a daunting and stressful prospect.”
So what steps can you take to make this living arrangement a success?
1. Set out some ground rules
At the outset, you need to be open and honest and set out some ground rules.
You need to discuss how you see your living situation working, how much independence each person needs, and what some of the sticking points may be.
If you are open with one another about what your expectations are, this will save arguments further down the line. Also, decide who is responsible for household chores such as washing, cleaning and shopping.
2. Organise your finances
If you’ve made the decision to live together, you need to give some thought to how the finances will work.
This means having serious conversations about who will cover the major outgoings, such as the mortgage, and who will pay for the energy and other utility bills, as well as day- to-day expenses such as food.
One option is to split all the bills between all the adults in the house. “If you opt for this arrangement, you should set things up so all the communal bills come out of one account,” says Damien Fahy, finance expert at Moneytothemasses.com. “Each person should set up a standing order into the communal account for the agreed amount on the day after payday. For ease, all bills should then be paid by direct debit.”
Julie Hutchison, consumer finance expert at Standard Life, adds that while dividing bills makes sense if everyone has an income, helping to pay doesn’t always have to mean paying in cash.
“A grandparent may have more time to tend to domestic duties, such as washing, cleaning and repairs – as well as providing free childcare,” she says. “Time is a valuable asset that can be offered in place of money.”
No matter which option you go for, the key thing is to get an agreed system established from the outset.
3. Plan caring responsibilities
Life can be particularly hard for the so-called ‘sandwich generation’ – those who are simultaneously caring for both younger and older family members.
“Quality of life can suffer as a result of this ‘dual-caring’ role,” says Fraser. “This can also affect relationships with other family members.”
The key here is to come to an agreement that everyone is happy with.
4. Arrange your home so everyone has their own space
If you’re planning on living with multiple family members, you need to ensure the property is suitable. While some families may club together across the generations to buy a new property for everyone to share, others will need to make modifications to their existing home to accommodate the additional bodies.
This could, for example, involve adding an extra bedroom, bathroom or granny annexe to your home; you may even want to consider creating separate entrances.
5. Don't forget legal and tax-planning considerations
Before committing to living together, you need to think about whether there may be legal or tax-planning issues. This may be the case if, for example, properties or other assets are bought together by more than one person.
“You also need to think carefully if the house was – or is – in the name of elderly parents as there will be inheritance tax issues to consider,” says Hutchison. “Make sure you tee up the legal and financial side of things, so you’re not caught out.”
Consult a lawyer so the key points are set down in black and white and also get authoritative tax advice.
- Be wary of getting joint bank accounts to run the household finances. “This will make all family members ‘financially connected,’” warns Fahy. “In the event that one person develops a bad credit rating, this would then start to impact on everyone else – and could affect their chances of getting credit.”
- Ensure each family member at the property is registered to vote at that address, as that will help with credit searches if you do decide to go your separate ways. Q Make sure you have sufficient contents insurance in place to cover all of your household’s assets, as more people under one roof will mean more contents to insure.
- Also consider getting a Lasting Power of Attorney to ensure household finances can continue to tick over smoothly. “You can imagine the difficulty with a frozen bank account if someone loses capacity and doesn’t have a Power of Attorney in place,” says Hutchison.
“We have made it work for us”
Maggie Brown, 65, and her husband, Allan, 74, pooled resources with their daughter, Debbie Nutten, 45, and son- in-law, Derek, 41, three years ago so they could buy a bigger home together in Portlethen,Aberdeenshire.
They now live together in a four-bedroom property along with granddaughter, Sarah, 22.
“Allan and I had been rattling around in a three-bed place that was just too big for the two of us,” says Maggie.
“Debbie, Derek and Sarah were in a two-bed house but were keen to find a new home, as they were struggling with difficult neighbours and also wanted to upsize. At that point, we decided it made sense to share our finances and buy a place where we could all live together, as this seemed to be a win-win situation.”
In their shared home, two of the four bedrooms are en-suite; there is then a further bathroom and separate toilet.
“Even with all these rooms, it’s important that everyone gets their own space and privacy,” says Maggie. “Debbie, Derek and Sarah have their own sitting room at the front of the house, and Allan and I have turned the dining room into our sitting room, as the kitchen is large enough to seat all five of us.This has worked fine, although work has now also begun on a new dining room.”
For all three generations, one of the big advantages of living this way has been the fact they can share chores, as Debbie, Derek and Sarah all work full-time. “Allan and I help out by doing
the cooking, shopping and cleaning,” says Maggie.
The two couples have organised the household finances so Debbie and Derek pay the mortgage, while Maggie and Allan pay the council tax; other expenses such as food shopping and energy bills are then shared between them. This means big savings on living costs.
“Having Sarah around has given both Allan and I a new lease of life,” says Maggie, an active member of over-50s website, Silversurfers.com. “We love sharing our big home and garden and now do a lot more things together as an extended family. Trying to live this way does take some getting used to but by making decisions together we have made it work for us.”
Lasting power of attorney
Refers to the legal document which allows an individual (donor) to nominate a person or people (attorneys) to make decisions on his or her behalf should they reach a state where they no longer have the mental capacity to make certain decisions. LPA can be divided into two groups: the donor’s financial wellbeing and their health and general welfare. You can choose anyone you trust to act as your attorney provided they are over 18 and not bankrupt when they sign the form and you can appoint more than one person to act and can choose whether they can act together or independently. An LPA is a powerful and important legal document and you may wish to seek advice from a legal adviser with experience of preparing them.
The tax levied on the total value of your estate after you die. IHT has to be paid by the beneficiaries of your estate before they can receive any of the money from it. The money can’t be taken from the value of the estate _– it has to be paid before any money can be released. There is an IHT threshold – known as the “nil-rate band” – below which no tax is levied (£325,000 in 2011/12). Any amount above the nil-rate band is subject to tax at 40%. If your estate totals £600,000, there is no tax on the first £325,000; however your estate will pay 40% tax on the remaining £275,000, a total of £110,000. Prudent tax planning can reduce your IHT liability, so always consult a specialist solicitor.
Does exactly what it says on the tin: covers the contents of your home for theft and damage and also may insure certain possessions (jewellery, cycles) outside of the home. Things to watch for include the excess and also the maximum payout on individual items. Another grey area is kitchen fittings, as some contents policies say these are not contents but part of the fabric of the property and covered by buildings insurance and some buildings policies don’t cover them because they regard them as contents.