25 Jun How To Plan For The Family Vacation Home
By: Barry E. Haimo, Esq.
June 25, 2020
Owning a vacation home can be exciting and stressful all at the same time. Knowing that you own a piece of property that your family can use as a getaway is a great feeling. On the other hand, you now have an extra property that you need to manage, pay taxes on, and eventually figure out how to pass on to your next of kin.
Failure to conduct vacation home estate planning can be disastrous. If no planning is done, or not enough, this can lead to fights among surviving family members over control of the property. Proper planning is essential if you want to set your family up for future success.
Why Estate Planning Is So Important
A 2017 survey from the AARP found that over 60% of Americans don’t have a will. This has major implications as it means their relatives will be dealing with the fallout of this decision once they pass.
Failure to set up a will and do proper estate planning can mean your assets will not be distributed in the way you intended. If you pass without a will, your assets will be divided according to state law. It may mean that certain members of your family aren’t taken care of the way you would like.
How will your children handle splitting up cars, houses, or — in this case — the vacation home? This can lead to the kinds of disputes you read about in the news. The kind that split families apart and turns siblings against each other.
So, how can you make sure the family vacation home is taken care of after you pass?
Taking Care of the Family Vacation Home
There are a few things you should be cognizant of when you are setting up your vacation home that can help greatly with estate planning.
Who’s the titleholder?
You want to make sure to first settle who is the titleholder. Will the house be in your name or in the name of both you and a spouse?
If the vacation home is jointly held then you will need to decide if it’s held in rights of survivorship or tenants in common. Survivorship would mean your shares of the property would pass to the co-owner upon your passing. Tenants in common would mean shares can be willed down to others.
Where is the vacation home?
Next, you need to take into consideration the location of the vacation home. If you opt to purchase a vacation home in a state different from your primary residence, there could be completely separate laws surrounding how it is passed. This is even more applicable if the vacation home is in another country.
Will future generations enjoy the home?
Do you plan on the vacation home staying in the family for multiple generations? This is possible if you have an agreement set up with signatures from all parties involved. In this case, it can make sense to set up the property under an LLC with an agreement dictating the usage of the property.
By setting up an LLC you can pass the property down without worrying about it creating conflict among your surviving heirs. This way, multiple generations will be able to enjoy the property.
Ultimately, it is best to speak with an experienced Florida estate planning attorney. He or she will be able to guide you in the right direction and make sure all of the finer details are taken care of. This can ultimately save your descendants a great deal of time and money and potentially help keep your family together.
Barry E. Haimo, Esq.
Strategic Planning With Purpose®
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