How CPAs can help clients combining households during the pandemic

Accountants can guide families through the financial side of family household changes.
By Taylor Knopf

The coronavirus pandemic has changed many aspects of life, including where people live.

A record number of young adults have moved back in with their parents, and some families have decided to combine their households or take elderly loved ones out of nursing homes to protect them from the virus and help them avoid isolation.

CPAs can help their clients navigate these life shifts in a few different ways — whether it's adding dependents when filing taxes or finding the best way to finance a larger living space.

Below, two CPAs share their thoughts on how to help clients through changes in their households. 

Financing larger living spaces: Some multigenerational family units working and learning from home together have chosen larger living spaces. Oscar Vives Ortiz, CPA/PFS, of PNC Wealth Management, said real estate in his hometown of Tampa, Fla., has picked up during the pandemic.

"Families being together and spending more time together during the pandemic can be a positive silver lining," he said.

Clients need to weigh several factors when purchasing a larger home, Vives Ortiz said. CPAs can help clients determine the most tax-efficient way to buy a new home, weighing factors including the size of a down payment, mortgage options, future tax obligations, and whether to buy it outright.

CPAs can also discuss with clients where to pull the money from — including whether to involve savings, retirement, or investment accounts, he said.

Kids coming home: More than half (52%) of adults under 30 are now living with their parents, according to a summer analysis of Census Bureau data by the Pew Research Center. Pew authors noted that the last time this many young people lived at home was during the Great Depression.

"Young adults have been particularly hard hit by this year's pandemic and economic downturn, and have been more likely to move than other age groups," the authors wrote, pointing to a separate Pew survey that found about one in 10 young adults moved due to COVID-19.

Twenty-three percent of people surveyed cited college campus closures as their main reason for relocating, and 18% said their move was a result of job loss or other financial reasons.

It's important for CPAs to remember that every family situation is different. And children returning home as adults for a period of time shouldn't be viewed as a negative event, said Paula McMillan, CPA/PFS, CGMA, with Stearns Financial Group in Greensboro, N.C. "Some really positive things come from generations living together," she said.

She would encourage CPAs to emphasize to their clients the possible financial benefits for a young person who moves back home for a time. Providing a temporary financial safety net could allow young adults to pay off their student loans quicker or save for a down payment on a home.

"Throw out the stigma that staying at home until marriage — or some other predetermined time — is a failure to launch," McMillan said. "What young adults and their parents decide to do today, in this uncertain world requiring more margin of safety than ever, is up to them."

She does caution parents to create boundaries upfront. Some young adults have moved out of crowded apartments they shared with roommates, and McMillan said it can be appropriate to implement some rules. Maybe establish a form of rent payment or determine their share of utility and grocery costs, she said.

Revisit health care proxies: Vives Ortiz said this is also a good time to remind clients to ensure their planning documents are in place, such as health care proxies and medical power of attorney.

Parents are used to making those decisions for their children, Vives Ortiz said, but once the children reach adulthood, they need to set up a medical power of attorney.

Under some COVID-19 travel restrictions, it may be time to revisit those documents. CPAs can direct clients to the proper professionals to help them get this paperwork in order. For example, if a client designated as a proxy a family member who now lives in another state, it might be useful to transfer that responsibility to a more local relative, he said.

Grandparents moving in: While a significant number of adult children are coming home, the pandemic has also prompted many to move their aging parents and relatives out of congregate living facilities and into their homes.

COVID-19 has taken a significant toll on the oldest Americans. As of early March, there were 1.4 million cases and 175,059 deaths in long-term care facilities across the nation due to the virus. Some Americans have taken time off work to care for their loved ones who moved in with them during the pandemic, which can be a significant financial burden for some families.

McMillan said this underscores the importance of financial scenario planning, including planning for bad scenarios. While financial planners don't factor in a pandemic, per se, they do factor for loss of work due to a catastrophic health event, she said.

"What we're talking about is 'margin of safety,' whether it's a pandemic or another health event," McMillan said.

Some people set aside money over time anticipating elder care or taking significant time off work to care for an aging parent, she said. Other people may be exploring those options now or looking at the costs of retrofitting homes.

If a client is paying for more than half of a family member's living expenses, that family member could qualify as a dependent for tax purposes. Vives Ortiz said CPAs can help clients navigate the rules and conditions around claiming adult dependents and determine if this might be an option for them as relatives move in.

Vives Ortiz said he's also come across situations where an elderly client will make adjustments to his or her estate to leave a greater portion to a child who has taken on the bulk of their care. He has even helped clients formalize caregiving agreements.

"Some people have made adjustments to their estate plan," Vives Ortiz said. "And that's something that needs to be communicated. Communication is key. Oftentimes people would rather talk about medical issues than finances. It just seems so personal."

But having these tough conversations now can avoid conflict down the line.

"Every family dynamic and situation is going to be a little different," he said. "But better communication among family members should alleviate any kind of ill will once Mom or Dad pass away."

CPAs can help open the channels of communication on this issue and help their clients think about what needs to happen next.

For more news and reporting on the coronavirus and how CPAs can handle challenges related to the outbreak, visit the JofA's coronavirus resources page.

Taylor Knopf is a freelance writer based in North Carolina. To comment on this article or to suggest an idea for another article, contact Chris Baysden, a JofA associate director, at

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