This Is One Of The Worst Things You Can Do Financially

Added: 2026-06-11

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[00:00:08]>> We are currently in a multi-generational household. We just moved in not too long ago with my in-laws.

[00:00:17]But there has been some costly updates that probably should have been taken care of a while ago.

[00:00:25]Um but my in-laws are expecting us to pay for it, but they haven't fully us the home yet. Does that make sense?

[00:00:34]>> Yeah, I mean when when are they planning on giving you the home?

[00:00:37]>> Um when it's paid off.

[00:00:40]>> 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?

[00:00:51]>> Yes, there are um 10 of us living here in the home.

[00:00:55]>> Wow.

[00:00:56]So it sounds like more than that. Is it kids? Who else is there?

[00:00:59]>> We We have six kids.

[00:01:02]>> Oh, okay. So how does this work? I'm curious cuz I've heard about these. Uh how who pays who? So they own the house, they pay the mortgage, and then you pay them rent?

[00:01:12]>> And then we're just paying the utilities.

[00:01:15]>> So you don't pay rent?

[00:01:17]>> No.

[00:01:18]>> Okay. So you're living pretty cheaply and they're going, "Well, hey, listen, you guys are living here pretty cheap.

[00:01:22]The house is going to be yours. We think you should pay for these renovations."

[00:01:26]>> Yes.

[00:01:26]>> repairs. How much is it?

[00:01:28]>> Yes.

[00:01:29]Um well, just for example, we had to order like a new um like a window, and that was like $900. So But it had, you know, been needed to be taken care of before we moved in.

[00:01:45]>> So they waited until you guys moved in and said, "Hey, there's a lot bunch of repairs to do."

[00:01:50]That's fun.

[00:01:50]>> Um kind of, but not really. But my husband Go ahead.

[00:01:55]>> Well, I was going to ask, how how did this all come about?

[00:01:59]Did they offer this as, you know, a great option in life and you guys were like, let's do it? Uh >> Yes.

[00:02:08]>> Okay.

[00:02:08]>> My husband got a job opportunity and so we moved back to his hometown.

[00:02:14]>> Left to your own devices, would you guys want to have your own place?

[00:02:18]>> No, my we we want the multi-generational to to work. We want it to work.

[00:02:25]>> Okay. Well, then I would do a reset. If you really want this to work, I would do a reset on all things finances cuz it sounds like you guys never actually came to any agreements as to how it work other than you guys pay utilities. That was pretty much it.

[00:02:37]>> Correct.

[00:02:38]>> 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 $100,000, when they give it to you and now it's worth $500,000, well, you're going to owe taxes on all the gains.

[00:02:57]But if they 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 500 and and you got it at 500." So, there's no taxes. So, if you went and sold it within a couple months, you'd have no taxes to pay. And so that's one of the issues with giving a home to your kids.

[00:03:15]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.

[00:03:22]So, I'd caution you against that.

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[00:03:57]>> Well, it's actually one of the worst things you can do from a financial perspective.

[00:04:01]So, I'd caution you against that.

[00:04:03]>> Which then complicates it, right? Well, then how do you get the house? Well, you need to like buy it from them >> Or or you all live there until they die.

[00:04:10]I mean, do you know what I mean? From >> Oh, yeah.

[00:04:13]>> But, is that Is that what you guys want though? You want a long-term life like this?

[00:04:18]>> Yes. Yeah, that's what we're planning on.

[00:04:21]>> old are the parents?

[00:04:22]>> In their 70s.

[00:04:24]>> Okay. So, listen, people do life different.

[00:04:28]And if this is how you choose and what you guys value and want to do, you you do what you guys want. I mean, you're both 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.

[00:04:44]Uh, you know, his mom passes away in 5 years, dad's 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.

[00:05:08]You quote unquote you're out of the deal now um 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 avenue's 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 And you have to take care of them. There's addiction >> out of money, and now they're doing a reverse mortgage, and now you can't even inherit the home without paying that.

[00:05:48]And so there's a lot of issues that could arise in the meantime.

[00:05:51]>> This it sounds This is why doing deals with family can be a little sticky. And And what I'm going to propose is going to sound probably a little heartless, but I would I would almost write some type of legal contract that could hold up in court that literally plays out. It's what we would do if someone did a partnership in business. We don't recommend partnerships, but if we do, like you got to think about it all.

[00:06:13]Addiction, divorce. So, you go through all the things that could happen to put you guys in a bad situation.

[00:06:20]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.

[00:06:28]Sometimes there's crazier things that happen.

[00:06:30]Sometimes nothing happens and and everything's fine, but we wouldn't have jobs if everything went according to plan for people.

[00:06:36]>> Yeah, and they are willing to write something, you know, get something in in written form.

[00:06:44]Um in case, you know, XYZ happens.

[00:06:48]>> And then I would also come to an agreement on how repairs and renovations are going to work cuz you're going to have more of this as time goes on.

[00:06:55]And so, are you guys going to cover it forever? Are we going to split it 50/50?

[00:06:59]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.

[00:07:09]>> 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 5, 6, 7 years resentment plays up and you know what I mean comes in and and it starts to erode you guys, right? Like Like you just need to be thinking through all of this.

[00:07:33]Um 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? At the house. So, >> Or they expect you to take care of them regardless of the finances because they are in their 70s.

[00:07:52]>> 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 agreement.

[00:08:01]>> And I 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 to hey, can you help us craft this in a way that makes sense for everybody?

[00:08:11]>> Yeah, I think that would be great and I would feel comfortable probably doing that.

[00:08:16]>> 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 cuz 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 a tax bill on that $700,000 in gains from when they bought it in 1982."

[00:08:36]>> Yes. Yes. Okay.

[00:08:39]>> How many bedrooms is this? I'm just curious with 10 people there.

[00:08:42]>> Three, four, five bedrooms.

[00:08:45]>> Wow. So, are the kids all bunking up?

[00:08:47]>> Um no, just some of just some of our boys. They're younger and so they um also have a a bedroom, but there's essentially two like primary suites.

[00:08:59]Um >> And the six kids are splitting three rooms.

[00:09:03]>> Yes.

[00:09:03]>> Okay.

[00:09:04]>> And then we have a baby with us, but also um 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.

[00:09:16]>> Oh, wow. This is palatial.

[00:09:18]>> That's great.

[00:09:19]>> Okay. Well, I wish you the best. I really do hope it works. Um it it sounds so good on paper. Like Grandma and Grandpa are there and and Dr. Arthur Brooks, he's mentioned this cuz he his kids live with him.

[00:09:30]>> Yes, that's right.

[00:09:31]>> and it's a great situation, but it's because there's healthy boundaries in place.

[00:09:35]>> Yes, he does psychology, you to be functional.

[00:09:38]He studies this for a living, too, which is a good thing.

[00:09:41]>> some financial footing, have good boundaries, be emotionally, mentally, financially healthy for this to work.

[00:09:46]>> 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, um 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.

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