Could you just attach a curtain rod to the ceiling that would close off each bed for privacy?
http://www.overstock.com/guides/how-to-hang-a-curtain-rod-from-the-ceiling
http://www.redbookmag.com/recipes-home/tips-advice/curtain-paneled-bed-project#slide-1
Make the closet into a private hang out. You could simply put some big pillows on the floor or a bean bag chair... maybe a bookshelf.
http://needspark.wordpress.com/2010/06/24/closets-as-rooms/
http://www.prettyhandygirl.com/2010/06/when-is-closet-not-closet-when-it-is.html
Create a private space somewhere else in the house for your dd/ds to go when they want to be alone.







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