John Tripe
HAVE you heard about multi-generation housing (MGH)?
I hadn't until last week, but now I know it's common and some of my own family are doing it.
Indeed MGH isn't new and in earlier times, and in some parts of the world, it is an increasingly normal family arrangement.
As we say: You can do anything with a family trust; they go together like a horse and carriage.
Trusts are put to many and nefarious purposes, but are not the preserve of Mossack Fonseca. The trust is an old and honoured part of English common law, but they just don't play cricket in Panama.
Trusts have been used and abused in recent times but they are still perfect for family purposes, and especially so in New Zealand.
For about 30 years we have set up very simple trusts for parents wanting to protect the family home in their lifetime and pass it eventually and safely to the next generation.
Occasionally parents may have reason to leave unequal shares to their children, and a feature of the common discretionary trust is that it cannot be challenged by children who demand shares, as they might challenge a will. Thus parents may provide for a child who has come home to help, as a prior beneficiary of the trust.
But in today's world, there's so much more. Children marry later and then juggle jobs to care for their children. Grandparents can and want to help now. But later they themselves may need help with household maintenance or personal care. Adult children may struggle to buy family homes for their own, but then large homes are no longer suitable for parents. Our needs and expectations are infinitely variable and always changing.
The essence of MGH is that it may well suit several members and generations of the family to stay and share the home, or to acquire a larger property for present and future circumstances as they happen. Consider a typical family of parents with children in their 20s. The daughter and son-in-law may be unable to, or are not ready to, buy their own home. They have younger children and are both working. Another son may be studying and then repaying the student loan.
The parents may have a large home and all may live together and share. The parents may have capital and the children have income. The grandparents may help now with care of the children and then with the costs of education. They may share motor vehicles and alternate holidays. They may convert or enlarge the home to give degrees of privacy and then add a granny flat. Some will grow vegetables and all may work together to paint the house.
The starting point and common case now is the parent alone in a large family home with one of the children ready to share and care for each other. There may be a wish on the one hand, and expectation on the other, that the child who shares and cares will inherit the property. And so it should be.
A will gives no certainty. A simple family trust is suitable, together with a letter or a deed to record the arrangement.
Still there is some uncertainty. How long will the parent live and manage with help at home, and how long will the child be able and willing to support?
If the family are willing the discretionary trust can do it all, together with a carefully worked family agreement.