Owning a family vacation home would be a dream come true for many families. Having such a place provides families with a place to relax and enjoy time together while creating memories which will last a lifetime. For some families, achieving this dream means pooling resources in order purchase a vacation home while others may jointly inherit the property. However the ownership happens, when you own property together as a family, it is important to be aware of certain issues.
Ways to Share Ownership
When you jointly own property the type of ownership you have can be very important. Depending on the ownership, you may end up owning a property with the descendants of the original co-owner. Under Michigan law, there are four ways to own property: Joint Tenancy; Tenants in Common, Joint Tenants with full right of survivorship, and Tenants by the Entireties. Joint tenancy means that you and one or more co-owners will equally own and are responsible for the property. If one of the owners dies, under a joint tenancy the deceased person’s share of the property passes to the surviving joint owner. Joint Tenancy with Right of Survivorship is the same as joint tenancy in that if one of the co-owners or “joint tenants” were to die their share in the home would pass to the other co-owners without the home having to go through probate. However, the “rights of survivorship” added to the joint tenancy makes it almost impossible for one owner to convey their interest in the property by himself or herself. Tenancy in Common is when the property is owned by two or more people who are not married to each other. All owners will have their share of the property meaning that if one died, their share would not revert to the other tenants but would instead become part of their estate. Tenants by the Entireties is when a property is owned by a married couple. This ownership has an automatic survivorship provision. If the couple divorces, the ownership become a tenancy in common.
Owning Property with Family
No matter which form of ownership you have of a vacation property, the fact remains that you are going to have to make decisions about the home with the other family member-owners. While this may same seem simple enough, home ownership of any kind can come with complications. In many cases, the property will be a joint tenancy meaning that while you own the property equally, you also owe equally for the expenses and upkeep. It will be important to determine if you have survivorship with your ownership or if you are agreeable with shares of the home passing with a co-owner’s estate. If you are considering entering into any home ownership with family members, it would be wise to sit down together and talk about your respective use of the home and responsibilities for its care and expenses. The more family members involved, the more complicated it can become regarding who is using it and how it will be maintained. Taking the time to select the right family members and talk to them beforehand will pay off in the long run and will make enjoying the home together more likely.
If you inherited the home with other family members, it would still be a good idea to sit down together and talk about what everyone wants and is willing to agree to regarding using and maintaining the home. This will allow you to work out differences before they escalate and hopefully come up with a solution which works for everyone.
One major mistake that people make is taking title to property as Joint Tenants with Full Rights of Survivorship without fully understanding the consequences. This can be devastating and may result in the owners being stuck in the ownership unless all owners agree.
There are a lot of elements to consider with joint ownership of property, especially when family is involved. In order to determine the best type of ownership for your family, it is important to obtain advice from an experienced attorney. Our office can provide guidance as to your options. Please contact us online or by phone if we may be of assistance. https://www.michiganestateplans.com/contact/