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Can you leave your home in a 55+ community to your adult child?

On Behalf of | Aug 17, 2023 | Estate Planning

The area around Reno and Lake Tahoe as well as Las Vegas and its surrounding region feature an abundance of senior communities. They’re often referred to as “55+ communities” since that’s typically the minimum age for residents.

They’re popular among seniors healthy enough to live in their own home but who don’t want the headaches (and backaches) involved with yardwork, house painting and other homeownership chores. If you have a house (or a condo) in one of these communities, it’s probably your largest single asset.

That means you need to address it in your estate plan. It’s easy enough to direct your heirs to sell it and include the proceeds in your estate for disbursement to your beneficiaries as you detail. If you want a particular beneficiary to benefit from the proceeds of the sale (for example, if you have just one child), you can do that as well.

What if an adult child (or another family member) has indicated that they’d like to inherit the home to live in? You don’t have to be a senior to appreciate the peace and quiet and other benefits that these communities can offer. You do, however, typically have to meet a specific age requirement.

The 80/20 rule

Typically, the way these communities operate is that 80% of the homes must be owned and occupied by those at or above the age limit, while 20% can have younger owners. This is known as the 80/20 rule. Therefore, if your adult child hasn’t reached the minimum age when you pass away, and the community is already at the 20% maximum for “underage” homeowners, they likely will not be permitted to move into your home.

To find out what your community’s rules are, check your covenants, conditions and restrictions (CC&R) document. If that’s clear as mud, contact someone on the homeowners’ association (HOA) board and ask them to point you to and explain the regulations on age – specifically for inherited property.

If you have an adult child who would like the home if it’s possible to live there, you can still leave it to them, and if they can’t move in, they can sell it or possibly rent it to age-appropriate people. Again, check your CC&R. There may be another 80/20 rule for how many homes can be rented, for example.

As long as you have sound legal guidance, you can be better aware of the various options for passing on all of your assets in a way that meets your goals and benefits your loved ones.