02 Aug Buying a retirement home together

Q. I’m 60 and my sister is 62, and we’re thinking of buying a retirement house to live in together. She has kids and I don’t. What steps to we need to take for estate planning?
— Sister

A. Shared housing is not uncommon in retirement, and for good reason.

More seniors are considering a shared housing option for financial reasons and for friendship and companionship, said Jim McCarthy, a certified financial planner with Directional Wealth Management in Rockaway.

He said sharing expenses and experiences can improve the quality of life of retirees.

But there are some estate planning details that you will need to watch out for in order to make experience as positive as possible.

McCarthy said there are two main considerations: what happens if you decide you no longer want to live together and what happens when one of you passes away.

He said the titling of the property will be very important to avoid any problems in the future.

You can choose titling the property as “Joint Tenants with Rights of Survivorship” or as “Tenants in Common.”

With Joint Tenants with Rights of Survivorship (JTWROS) each party owns the property equally and undivided, McCarthy said.

“If one party wants to transfer their share to someone else during their lifetime, the other owner must consent and sign the resulting deed,” McCarthy said. “Upon the death of one owner, rights of survivorship mean that owner’s share is transferred automatically to the surviving owner.”

The survivorship rights take precedence over the deceased owner’s will or state inheritance rules, he said.

Then there’s Tenants in Common (T-I-C), consists of owners who own equal or unequal shares of the same property.

“Each owner has full control over their share and can transfer their share to someone else at any time without the consent of other owners,” McCarthy said. “If an owner dies, their share in the property can be passed along to any person named in their will.”

If you choose T-I-C, McCarthy said, it is important that both you and your sister have a current Last Will and Testament that designates how each share of the property is dealt with upon one of you passing.

McCarthy said some planning now will avoid a potential messy situation in the future and will allow you to enjoy your shared retirement home stress-free. He recommends you work with a certified financial planner and an estate planning attorney to ensure both you and your sister understand the issues and have the appropriate documents drawn to meet your wishes.

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This post was first published in August 2016.