53.6% of 25 year olds in Illinois currently live with their parents. To give you some perspective, in 1999, only 25% of all 25 year olds lived with their parents. How did we go from 25% to 53.6% so quickly?
In my practice, I often counsel my clients about how to leave their assets to their children. Many of my clients have adult children living in their homes, some of the “children” being in their 30s and 40s. This often poses a problem as to what would happen if both parents die…would the children living there automatically receive their residence? How would the other children receive an equal share? Can the children afford the real estate taxes, utilities and upkeep? Often we find that the children who are not living in the residence have some resentment towards the siblings because they essentially are getting “free rent” for many years just because they are not required to pay anything to the parents. I can understand that parents want to keep the peace, provide for their children at all cost, and hope that the kids will all get along when they are gone. But unfortunately if there are no instructions for the children to follow under a Will and/or Trust, the likelihood is that the family will squabble over the division of the residence and assets.
So why the increase in adult children living at home? In the article by Tyler Durden found here: http://tinyurl.com/qh7698x he explains some of the reasons,
- Labor Market – It appears to be a tough job market for young adults. Perhaps it’s because older adults are working longer, there just aren’t enough jobs. I recently learned from one of my clients (who is a Canadian citizen) that in Canada, companies aren’t allowed to hire individuals who are 65 and older. That is the mandatory retirement age. This helps to provide jobs for the younger adults. To me, this doesn’t seem to be a bad idea.
- Housing Market – The recovery of the housing market seems to be driving up the rental rates. It appears to be more difficult for a young adult with a starting salary to even rent an apartment, let along purchase a first home.
- Student Debt – This is definitely a huge factor in young adults living at home. Many parents tell their children to go to college, get a degree, and then you’ll get a job. But if the children are saddled with hundreds of thousands of student loans, it becomes more practical to stay home before buying a home or renting.
Mr. Durden ends his article with “for all of the above you can thank, who else, the Fed for blowing the biggest debt-funded asset bubble in history”. Hopefully in the near future, our economy will continue to get stronger, our young adults will get good paying jobs, and move out of their parents’ basements. In the meantime, get your estate plan in place with the right provisions to address any adult child living in your home.