By: Barry E. Haimo, Esq.
November 15, 2018
How to Handle Your Vacation Home in Your Estate Plan
A vacation home is like a magnet that bring family members together. They represent a fortress of solitude where happiness thrives, and all members seem to get along just fine. Many beautiful memories are created within these vacation premises. So it makes sense that you want to ensure that your family will continue to enjoy that getaway even after you are gone.
Estate planning shouldn’t be taken for granted as far as family getaways are concerned. Poor estate planning may turn a breathtaking vacation property into a source of painful disagreements that drive your descendants apart.
With that in mind, here are some of the ways you can transfer the ownership of a family vacation home to your future generations.
This is the simplest way of leaving a family vacation home to your children. Fractional shares of the property are transferred to the children, and they become joint titleholders of the getaway.
Selling to an interested family member might be a good option, especially if the rest of the family members didn’t really enjoy their experiences in that house. If, for instance, all of your kids except one didn’t like going to a lakeside cabin without Wi-Fi, then you could save them the trouble and sell to the one child who loved the cabin.
Giving the vacation home to someone who loves and treasures the house is another way of ensuring that the house stays in the family. Many vacation houses have become family heirlooms that are bequeathed down from generation to the next.
Putting the Home Under A Qualified Personal Residence Trust
This is also a terrific option particularly because of the tax benefits attached. This transfer of property is a form of gifting that’s common for expensive homes whereby a specialized trust is created to ensure that the house continues to benefit future generations even after the parents’ demise.
Limited Liability Companies (LLCs)
Family LLCs are another way that family vacation homes can be transferred to descendants. In addition to being a clear and flexible transfer framework, LLCs have an added benefit of protecting the asset. LLC documents outline an operating agreement which is followed by those using the vacation premises.
The problems that arise within the subsequent generations are often due to the burdens of the vacation home, as well as the perceived benefits. Common burdens include the expenses incurred in maintaining and repairing the house and paying for taxes, utilities, and insurances. A common perceived benefit is the money that could be gained from selling the home. Some of the parties to whom the vacation home is gifted might, in fact, want to sell it right away.
To avoid discord and bruised feelings among your children, it’s wise to contact an experienced Florida estate planning and business planning lawyer to help you draft legal forms and guidelines for using and sharing the property. Such guidelines would, for example, help family members who wish to sell their interest in the home.
Buying and gifting family vacation property out-of-state should also be under the guidance of a lawyer. Generally, you and your lawyer can work out the best, most straightforward way of transferring property without causing undue stress to your children.
Barry E. Haimo, Esq.
Strategic Planning With Purpose®
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