by KYW's Salil Gutt

Members of the sandwich generation are embracing new and creative ways of taking care of their elderly parents. One idea rooted overseas is striking a chord here in America. 

Known as "granny flats' overseas the essence is for mom and/or dad to live in the family home of the children. This can be an attached or detached part of the house. This arrangement is less expensive than independent living and good for family life.

Here's how the finances could work.

Children buy the real estate and undertake the fit out of housing to meet everyone's needs. Seniors sell their homes and avail of the  capital gain exclusion of $250,000 per person, $500,000 a couple. They also have cash to invest.  Some of this money is loaned to the children to help close the deal. The children repay the loan on an interest only basis with the loan balance applying against future inheritance. The parents enter into a rental arrangement with the children.

This can be a win-win situation for all involved but it is important to use an attorney to help draft such a document to address the "what-if' issues that come up.