Court Bonds

What If The Nest Is Never Empty?



During estate planning, the question of what to do with the family home is often the most important decision to be made, as it frequently represents the most valuable asset to be inherited. Given the trend toward more adult children living in the family home with their parents, ever more attention to passing a home forward is needed.


Understanding The Trend: Boomerang Children

Because family homes are often the primary asset available for the next generation, challenges related to both bequeathing and inheriting them have always necessitated careful decision making during estate planning. The rising trend toward adult children remaining “at home” during the parental lifetime raises even more considerations. A survey by Harris Poll for Bloomberg found that “about 23 million—or 45 percent—of 18-to-29-year-olds are living with their parents,” and this represents “the highest level since the post-Depression era.” While economic stressors have certainly contributed to this trend, caregiving dynamics, as the parents of adult children age and anticipate living longer lives than previous generations, also factor in:


A sign of tough economic times can be evidenced by the large number of young adults living at home with their parents….Bloomberg cites economic headwinds like high inflation, the lingering effects of pandemic lockdowns, student loan debt, unaffordable home prices, and an uncertain job market as reasons why young people are staying home en masse….Moving back home is not always the result of a child’s money problems or financial circumstances. The second-most common reason cited in the Bloomberg poll was taking care of older family members….Helping with family expenses…ranked fourth. Maybe one parent passed away and the surviving parent either does not want to live alone, requires living assistance, or is on a fixed income and needs help making ends meet. 


Diligent Decision Making 

Of course, with the help of an experienced lawyer, careful estate planning can allow for a home to pass smoothly to one or more designated beneficiaries, even if there is still a mortgage on the home: “A person can leave a house to a loved one after their death under the terms of a will or trust, or with the use of a transfer-on-death deed … When the home transfers, a mortgage or loan secured by the home also transfers.” 


Typically, decisions about the family home become complex because parents aspire to leave it equally to multiple children, and multiple beneficiaries must agree on how to proceed with keeping the home, paying the mortgage, or selling it and dividing the remaining proceeds: “Any option requires all beneficiaries to be on the same page. One or more beneficiaries can buy out the shares of the other beneficiaries, although higher home prices and mortgage rates could make it impractical for one or more beneficiaries to buy out the other beneficiaries.” Note that because property has ongoing upkeep expenses, like utilities and insurance, maintaining it while making arrangements to sell it, can drain the estate: “The longer it takes to list and sell a property, the more it will cost the estate and the less money the legatees will receive.” 


In the case of an adult child living at home and paying rent to the parents, further complications can arise, since as a “tenant,” rather than a guest, that child has 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. Eviction might not come up when the parents are alive, but it could become a problem when they pass away and the estate plan orders the sale of the house and the division of its proceeds to beneficiaries. Additionally, the adult child might not have anywhere else to go or the financial means to make alternate arrangements. Also, to further complicate matters, the estate executor is likely to be a sibling, raising the possibility of family strife.


Of course, instead of using joint ownership and a contractual right of survivorship to transfer a home, parents can opt to leave the home to one or more children, via a traditional estate planning vehicle, such as a will or trust. However, even this requires difficult decision-making and courageous conversation to address questions about what “equal” means for the family, and how finances (both assets and debts) will be handled and sorted among surviving children. The good news, as estate planning experts remind us, is that proactive decision making can result in a solid plan for the family home: “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.”


Good To Do: Estate Planning Tips

In addition to engaging an attorney and proactively planning for the future of the family home and other important assets, it is important to designate a loved one, friend or professional to serve as the fiduciary who will carry out your estate plan. Be sure your designee understands your arrangements, and has the detailed information needed to attend to them. Depending on your circumstances and region, your fiduciary may be specifically referred to as an executor, trustee, or personal representative. Regardless of the details of your estate plan, the fiduciaries you appoint have a legal responsibility to carry out your affairs, in accordance with the intentions set forth in your plan–and the law. When representatives are designated, fiduciary bonds, alternatively referred to as estate bonds, can be required as a safeguard for the interests of the estate and beneficiaries. Learn more about estate bonds right here.

At Colonial, a leading national provider of all types of fiduciary bonds, the steps to obtaining estate bonds are easy: get a quote online, fill out the information, and enter a payment method. Print or e-file the bond from anywhere—even the law office. 


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