Family cottages can be places where families can come and enjoy time together throughout their lives. As the owners of this type of property plan for their estate, they will have to make decisions about the future of their vacation property while considering the needs of their family. Here is what you need to consider regarding the family cottage and your estate plan.
Deciding Who Will Get the Property
The first decision a family cottage owner will have to make is whom they want to inherit the property. Often owners want the property to remain in the family for future generations. Determining how to accomplish that goal can be difficult, however. Leaving the property to one relative allows that person ultimate control. By contrast, naming multiple family members as owners may lead to disagreements over the use and maintenance of the property. For example, arguments could arise over who can be in property on a holiday or is responsible for property taxes and repairs. Additionally, some owners may want to sell the property while others want to keep it within the family. Take time to consider who will be most appropriate to inherit the property and if any conditions need to be set on how the home is used.
Ways to Convey the Property
There is always the option of leaving the family cottage in a will to a designated beneficiary. However, as indicated above, this type of conveyance can be problematic later. An alternative to a will is creating a trust which will activate upon the death of the owners. After they have died, the property would be placed in the trust where it can be managed by a trustee and held for the benefit of named beneficiaries. The trust creator could also put restrictions on the use of the property which would not be available were they to leave it to someone in a will.
The property owner could also create a family limited liability corporation (LLC) or Family LLC which would allow beneficiaries to hold shares in the home. However, when looking at this option, there are also implications concerning the “uncapping” of property taxes and other provisions of the tax laws.
There are a multitude of options available for family cottage owners when preparing their estate plan. The best course of action is to consult with an experienced estate planning attorney who can explain your options and the implications of different forms of ownership. Our office has the knowledge and experience you need to help your family thoroughly plan for their estate. Please contact us online or by phone if we may be of assistance. https://www.michiganestateplans.com/contact/