You probably have one or two friends that count “boomerang children” as members of their households. You might even have a boomerang child living with you. And you almost certainly have clients with boomerang children.
If you’re not sure what I’m talking about, “boomerang child” is the nickname for a young adult who has moved out, lived independently for a while, and then returned to live with his or her parents.
So many young adults have begun following this pattern that last December, the Pew Research Center conducted a survey, uncovering some interesting statistics about the “boomerang generation.”
According to the survey:
- 29% of parents of adult children report that one of their children has moved back in with them in recent years because of economic conditions.
- Regardless of whether they live with their parents, 63% of 18- to 34-year-olds say they know someone who has moved back home in the past few years.
- Parental income doesn’t seem to matter. Parents with an annual income of more than $100,000 and parents with an annual income of less than $30,000 are equally likely to have an adult child return home.
- Families don’t necessarily see the phenomenon as a bad thing. Parents of boomerang children report that they are “just as satisfied with their family life and housing situation” as are those parents whose adult children continue to live independently.
From a purely financial perspective, having a boomerang child may be a plus, especially as parents age.
If the child pays rent (which, according to the survey, 48% report that they have done), that money would be treated as income to the parents. But, what if the child helps out with household expenses, by splitting the cost of household utilities and groceries? The contributions could help defer the parents’ costs, without being treated as income. Interestingly, 89% of those responding to the survey reported that they helped out with household expenses, rather than paying rent.
From an estate planning perspective, it’s important to keep a pulse on your clients’ family dynamics. For instance, if there are likely to be boomerang children in the picture, you’ll want to make sure your clients’ documents specify that the trustee can allow those children to continue to reside in the family home, even though they aren’t minors or “dependents.”
How many of your clients have boomerang children? What planning issues have you run into as a result?
Stephen C. Hartnett, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (800) 846-1555
- Planning Is Important - September 22, 2020
- Staying Current is Especially Important in the Pandemic - September 15, 2020
- Generational Wealth is Key to Leveling the Playing Field - September 8, 2020