Should it be maintained for close relatives? Will the next generation use it together or separately? Is it the site of family reunions? If not, will it be available to friends or even renters?
Few places prove to be so powerfully uniting for a family as the family vacation home. Cabins, beach houses, you name it – a vacation home is a desirable property. And since it is so pleasing to the family, this seemingly relaxing place can unfortunately become a sore spot when it comes to planning for it in your estate.
Estate planning is about planning for three things: the needs of your family, the straightforward assets you have, and the difficult assets you have (whether to transfer, own or both). Curiously, planning for your vacation home is about all three of these things in one.
Forbes recently considered the precarious balance between getting it right and getting the family into a fight over the vacation home in an article titled “The Family Cabin: Private Retreat Or Isolated Battleground?”
To plan for the vacation home, as with the family home, the family business, or anything truly precious, it pays to plan openly with your family and to plan decisively. Some family members may not want the house, and some might not be able to keep the house even if you gave it to them. On the other hand, perhaps everyone wants it.
Having an open discussion within the family, or even just one member at a time, allows you to uncover whether what they want is what you want for them and vice versa. After conducting your research, design and implement your plan. Once everything is in place and the ink has dried, then inform them of your plan and stick to it.
Some legal tools to consider include trusts, like a QPRT (Qualified Personal Residence Trust*), or perhaps formal business entities to own the vacation home and share it amongst your heirs. There is a lot of room for creativity.
Take a look at the original article and begin exploring this subject with your family. Regardless, be sure to enjoy the rest of these warm summer days wherever your family vacation home is.
Reference: Forbes (August 12, 2013) “The Family Cabin: Private Retreat Or Isolated Battleground?”*Please see my 8/23/2013 post on QPRTs for more information.