Financial and legal considerations of living with a relative
If you don't know where to start, just answer a few questions to find information best suited to your needs.
Think through how your new arrangement will work financially and legally. The smaller day-to-day bills are just as important as any 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 are disagreeing with is a family member. This doesn't mean you shouldn't consider a shared financial arrangement with your relative, only that you should do so very carefully.
On this page you can find examples of the kinds of considerations you should bear in mind:
1. Joint-ownership of a home
2. Legal arrangements
3. Contributions to household costs
4. Government benefits
Joint-ownership of a home
Rather than your relative moving into your existing home, you may be considering buying a new home to have more space. In this case, pooling resources with your relative might allow you to buy a larger property. Or perhaps your relative has offered to invest in your existing home, to allow for an extension to be built, or to have adaptations carried out. Seek advice from a solicitor to discuss the following:
Take advice It is essential that you and your relative 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. For more advice on finding an IFA, see this page on the Which? website.
What are the implications regarding inheritance tax?
Will the arrangements affect your or your relative’s will? Do decisions need to be made regarding how you and your relative bequeath your estates?
What would happen if your relative needs to go into a care home? How will your their assets be taken into account?
What would happen if you needed to sell your share of the house, but your relative did not wish to leave? For example, you might need to move for employment reasons, or choose to relocate when you yourself retire.
If you or your relative 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.
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. Which of the two options would work best for you, given your particular circumstances?