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Dealing with your retirement community home in your estate plan

On Behalf of | May 4, 2022 | Estate Planning |

Are you considering buying a home in one of Florida’s numerous retirement communities that are designated for people 55 and above, or do you already live in one? You may wonder if you can leave the home in your estate plan to one of your adult children. 

There’s really not a definitive answer that fits every situation. You’ll need to do some due diligence with the community. 

The 80/20 rule

If your child is under 55 years of age at the time that they inherit the home, they may not be able to live in the home. Most communities with age restrictions have an 80/20 rule. That means at any given time, just 20% of the homes can have residents who are under the minimum age requirement.

Further, many don’t allow minors to live there – partly to maintain a peaceful atmosphere and partly for insurance purposes. That could also prevent an adult child from being able to move in. If you already own a home in a 55+ community, check the covenants, conditions and restrictions (CC&R) document. That’s where any 80/20 rule would be.

Even if your child can’t (or has no interest in) living in your home, you can still leave it to them to sell and keep the proceeds. They might be able to take over ownership and rent it out to age-appropriate tenants. Again, the community may have restrictions on the number of renters who can live there.

Why life plan communities are different

Note that if you live in what used to be known as continuing care retirement communities (CCRC) and now are more commonly called life plan communities, you probably don’t own your home. The communities operate differently than traditional retirement communities. Therefore, your home probably wouldn’t be an asset you can bequeath to anyone. However, these communities generally refund a portion of your entry fee (if any refundable amount is available) to the heir(s) or your choice or directly to your estate when you pass away.

It’s a lot to think about. Make sure you know what your options are and what your child or any other potential heir feels about it. Having experienced legal guidance can help you make a choice that won’t complicate things for your loved ones.