This Is One Of The Worst Things You Can Do Financially

Zander shops all the top term insurance companies to save you money. Get started at zander.com. We are currently in a multi-generational Household, we just moved in not too long ago with my in-laws But there has been some costly updates that Probably should have been taken care of a while ago But my in-laws are expecting us to pay for it, but they haven't fully given us the home yet Does that make sense? Yeah, I mean when are they planning on giving you the home? When it's paid off Okay, that's still a bad idea for tax reasons But we can couch that for a second and talk about this multi-generational home. So is it just your in-laws and you guys right now? Yes, there are Ten of us living here and now So it sounds like more than that. Is it kids who else is there? We we have six kids. Oh Okay, so how does this work? I'm curious because I've heard about these How who pays who so they own the house? They pay the mortgage and then you pay them rent and then we're just paying the utilities So you don't pay rent No, okay. So you're living pretty cheaply and they're going to well Hey, listen, you guys are living here pretty cheap. The house is going to be yours. We think you should pay for these renovations Yeah repairs. How much is it? Yes Well, just for example, we have to order like a new Like a window and that was like nine hundred dollars. So But it had you know been Needed to be taken care of before we moved in So they waited until you guys moved in and said hey a lot bunch of repairs to do That's fun Kind of but not really but my husband Go ahead. Well, I was gonna ask how did this all come about? Did they offer this as you know a great option in life and you guys were like, let's do it Yes My husband got a job opportunity. And so we moved back to his hometown Left to your own devices. Would you guys want to have your own place? No, my we we want the multi-generational to to work we want it to work Okay Well, then I would do a reset if you really want this to work I would do a reset on all things finances because it sounds like you guys never actually came to any agreements as to how would Work other than you guys pay utilities. That was pretty much it We need a whole lot more than that and the thing about taxes I mentioned if they give you the house while they're still alive then you lose The ability to have the step-up in basis So if they bought the house for a hundred thousand dollars when they give it to you and now it's worth five hundred thousand dollars Well, you're gonna owe taxes on all the gains But if they and if you inherited the house after they pass Well now there's a step up and so the IRS says hey the house is worth five hundred and you got it And you got it at five hundred. So there's no taxes So if you went and sold it within a couple months you have no taxes to pay And so that's one of the issues with giving a home to your kids It sounds like a really sweet thing to do while you're alive But it's actually one of the worst things you can do from a financial perspective So I'd caution you against it There are basics every family needs food shelter transportation and term life insurance term Life is simple. If you pass away it pays money to your family so they can keep paying the bills Protecting the people you love is part of winning with money. And when you're ready to do that go with who I trust Zander insurance Zander shops top companies to find the right coverage at the best price and they've earned my Recommendation for nearly 30 years go to zander.com today, but it's actually one of the worst things you can do from a financial perspective So I'd caution you again Which then complicates it right? Well, how do you get the house? Well, you need to like buy it from them or or you all live there until they die I mean, you know you mean from oh, yeah But if that is that what you guys want though, you want a long-term Life like this Yes. Yeah, that's what we're planning on. How old are the parents in their seventies? Okay, so Listen and people do life different And if this is how you choose and what you guys value and want to do you do what you guys want I mean, you're both of you're all adults. Here's my fear Valerie. Is that Down the line and we've heard crazier than what I'm about to throw out. I'm just making this up You know, his mom passes away in five years dad 75 meets a woman online at 80 She wants to go and leave and sell the house, whatever whatever and you're 10 15 years into this wonderful plan Something gets derailed and for 10 to 15 years you and your nuclear family have done nothing from a home Perspective of building equity of having your own of saving for a home Quote unquote you're out of the deal now in this pretend scenario and Here you guys are in your 40s or 50s and you're starting from nothing from a home perspective Which is one of the it's the largest purchase you make as a home It's the thing that if you rent it continues to go up. So that avenues not smart long-term I mean it just puts you in a in a scenario that can be very sticky that you don't see right now But could happen in 10 15 years Someone gets sick right or you have to take care of them There's a run out of money and now they're doing a reverse mortgage and you can't even inherit the home without paying Yes, so there's a lot of issues that could arise in the meantime this it sounds This is why doing deals with family can be a little sticky and and what I'm gonna propose is gonna sound probably a little heartless, but I would I would almost write some type of Legal contract that could hold up. Yeah art that literally plays out It's what we would do if someone did a partnership in business We don't recommend partnerships that if we do like you got to think about it all Addiction divorce, you know You go through all the things that could happen to put you guys in a bad situation and you guys need to lay out scenarios to protect yourselves For whatever that could look like in the future. So that's my only word of caution. That doesn't always happen Sometimes there's crazier things that happen sometimes nothing happens and everything's fine But we wouldn't have jobs if everything went according to plan for people. Yeah, and they are willing to Write something, you know get something in in written form In case, you know XYZ happens Okay and then I would also come to an agreement on how repairs and renovations are gonna work because you're gonna have more of this as Time goes on and so are you guys gonna cover it forever? Are we gonna split it 50-50? Yeah, that's up to you guys to decide and if you want to foot the bill for this one But I think if it's $20,000 in repairs and they just neglected to do them I don't think that should fall on you. Mm-hmm. And then Valerie you and your husband need to have some really healthy check-ins as well because Sometimes you get locked in a situation where you start to be really unhappy Living with his parents and again, maybe not next year, but five six seven years Resentment plays up and unity mean comes in and yeah, and it starts to erode you guys, right? Okay, like you just need to be thinking through all of this Or if he gets another job offer he got a job offer to move home What if he gets an offer that would triple his salary and it moves you guys somewhere that you like really want to but then you feel Stuck in some situations, right? Yeah the house so I they expect you to take care of them regardless of the finances Yes, because they are in their 70s. Yep So I would just be I would be looking at every Possible thing and saying it out loud and you and your husband be in agreements And I would meet with an estate planning attorney just to help you navigate this not out of like we're not suing anybody It's just more. Hey, can you help us craft this in a way that makes sense for everybody? Yeah, I think that would be great and I would feel comfortable probably doing that Yeah and they can walk you through those financial aspects of well as well of what I mentioned of inheriting the house versus them giving It to you while they're alive because that's also some pieces to think about we get too many calls where someone calls in and they go Yeah, they just gave it to me while they were alive and we go Well, you have a tax bill on that $700,000 in gains from when they bought it in 1982 Yes. Yes. Okay. How many bedrooms is this? I'm just curious with ten people there Three, four, five bedrooms. Wow. So are the kids all bunking up? No, just some of just some of our boys. They're younger and so they Also have a bedroom, but there's essentially two like primary suites And the six kids are splitting three rooms yes, okay, and then we have a baby with us, but also There's potential to like make other bedrooms if we need to along the way, but it's a pretty spacious house It's 7,000 square feet. Oh, wow. This is polite. That's great. Okay. Well, I wish you the best. I really do. Hope it works It sounds so good on paper like grandma and grandpa there and and dr. Arthur Brooks He's mentioned this because he his kids live with him. Yes kids, and it's a great situation Yes, because there's healthy boundaries in place. Yes. It takes everyone has to be functional He studies this for a living too, which you need to have some financial footing have boundaries be emotionally mentally financially healthy for this to work Yep And a lot of thing a lot of people go in blindly Not thinking about what could be or don't address things and that's when the dysfunction starts to play out So it can be a beautiful thing if it works But a lot of times people aren't you know aware of all the traps so just going into it, you know Eyes wide open is important Xander is the best place to find term life insurance to protect your family visit xander.com for quotes today