Consider the finer details
If you’re thinking of having a friend or family member move in with you, think through how your new arrangement will work financially and legally. The smaller day-to-day bills are just as important as more significant costs, such as adaptations to your home.
Money has the potential to be a source of disagreement and tension. This can be especially difficult when the person you’re disagreeing with is a family member. This doesn’t mean you shouldn’t consider a shared financial arrangement with your loved one, only that you should do so very carefully.
Joint ownership of a home
Rather than the person you’re supporting moving into your existing home, you may be considering buying a new home to have more space. In this case, pooling resources might allow you to buy a larger property. Or perhaps your loved one has offered to invest in your existing home, to allow for an extension to be built, or to have adaptations carried out. It is worth seeking advice from a solicitor to discuss the following points.
- Read the Which? Money guide on what the implications regarding Inheritance Tax are.
- Will the arrangements affect your or your loved one’s will? Do decisions need to be made regarding how you both bequeath your estates?
- What would happen if you needed to sell your share of the house, but your loved one didn't wish to leave? For example, you might need to move for employment reasons, or choose to relocate when you yourself retire.
- What would happen if the person you’re supporting has to move into a care home?
If you or your loved one are considering taking out a new mortgage, the Which? Money Compare mortgage comparison table can help you find the most suitable mortgage for your needs.
Take advice on joint ownership
It’s essential that you and the person you’re supporting discuss all financial and legal matters with a qualified independent financial adviser (IFA), and a solicitor so that all paperwork is drawn up properly and professionally. The Which? Money guide on how to find a financial advisor talks you through the different types of IFAs and what to look for when selecting one.
The Leasehold Advisory Service (LEASE) is also a useful resource. It provides free advice on the law affecting leasehold property in England and Wales, plus a mediation service.
Joint tenants or tenants in common?
When two people own a property as joint tenants and one of them dies, it automatically passes to the other, irrespective of the will. Tenants in common own agreed shares in a property, and when they die their share forms part of their estate. Think about which of the two options would work best for you, given your particular circumstances.
Legal arrangements of living together
Should you decide to go ahead with your plans, you and the person you’re supporting should draw up an agreement in collaboration with a solicitor describing how you would deal with any disputes, should they arise, and, if necessary, how you would terminate the arrangement.
If your loved one invests in your home, ask your solicitor about adding their name to the house deeds as owning whatever proportion of the property they have paid for (rather than specifying the amount of money that has been contributed) and/or drawing up a Deed of Trust if restrictions on the title prevent this.
You should both also update your wills, in regard to any changes in your financial circumstances. Which? Wills can provide more help and information.
Contributions to household costs
Sit down with your friend or family member – ideally before they move in – and discuss how you see things working financially. For example, do you think it’s best for them to make a regular payment of a fixed amount to go towards bills, food, monthly mortgage payments or all of these? Or could they take responsibility for paying certain bills? It may be that you don’t expect any financial contribution, but bear in mind that they will probably want to feel as if they are paying their way.
It’s quite possible that your loved one has already given this a good deal of forethought and will have their own suggestions, so listen to their ideas and try not to enter the conversation with fixed ideas.
If the person you’re supporting is currently receiving any benefits, such as Pension Credit, they should check to see whether these would be affected as a result of moving in with you.
There are many practical issues to consider, such as space, expectations of family life and the need for compromise ...
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