Do you have a second home, summer property, or another vacation residence that your family enjoys? Have you thought about what happens to this property when you die?
If you don’t plan appropriately and thoughtfully and consult with an estate planning lawyer, problems may arise with respect to this property and your family when you are gone, says Kiplinger’s recent article entitled “Your Vacation Home Needs an Estate Plan!”
Speaking with your spouse and children is a good first step to help determine interest in retaining the property for the next generation and financial ability to maintain it. Let’s look at three ways you can plan for your vacation home.
Leave a Vacation Home to Children Outright During Life or at Death. An outright transfer of the home via a deed to children is the easiest way to transfer a vacation home.
However, if your children all own the property equally, they all have an equal say as to its use and management.
As a result, all decisions require unanimous agreement, which can prove challenging and be ripe for disagreement. Suggest that they create a Use and Maintenance Agreement to determine the terms and rules for the property usage. The contract would require all children to agree.
Form a Limited Liability Company (LLC). This is a tool often used by families, where each family member has a certain amount of membership interests in a home or to give away a home in a controlled manner. The operating agreement states the rules for governing the use and management of the property. Be sure to consult with an estate planning lawyer about the LLC.
Put the Vacation Home in a Trust. A trust is another way to help with the ownership and transfer of vacation homes. Ask an experienced estate planning attorney about how this might work for your family.
Planning for your family’s vacation property is important to help avoid litigation and maintain family peace.
Addressing how the property will be paid for and setting aside money for it—as well as selecting the right structure for your family to use and enjoy the property—will help avoid issues in the future.
Call an experienced Conejo Valley Estate Planning Lawyer with questions. Book a Call
Reference: Kiplinger (Feb. 1, 2022) “Your Vacation Home Needs an Estate Plan!”