I'd, personally, move generations out into their own homes. One of my favorite things about 3 is I very rarely feel like my connection to my favorites is dead because it very much feels like my own world, even when I am not controlling them directly. If you know they are not going to die without you, it is all the safer to make them the side characters in the descendants' stories. If you come up with an idea for them later, you can always come back or involve them in other things.
So I always end up eventually splitting up these households at some point or the other.
