Preserving the Family Camp, Cottage, or Lake House
This month, we teamed up with Meredith Maller from the law firm Eaton Peabody to provide you with information on an estate planning topic we often discuss with clients.
During this difficult time, many families seek refuge at their camp, cottage, or lake house. These retreats serve as safe havens where families gather across multiple generations to forget the stresses of day-to-day life during swims in the lake or ocean, boat trips, and around the fire pit.
All too often, the death of a vacation homeowner turns what was once a sanctuary into a catalyst for intra-family fights. Shared ownership generates enormous stress, even animosity if co-owners aren’t in agreement with no clear plan in place. Issues arise concerning the division of usage time, (Who gets July 4th Weekend?) and shared maintenance expenses (Who pays to drain the pipes in the fall?)
There are also unexpected circumstances, such as death, divorce, bankruptcy, or even the need for unanticipated capital improvements. Looks like we need a new roof this year! Without a clear written plan for navigating these issues for posterity, family disagreements devolve into fractured relationships, forced sales of long-held family property, and even litigation.
What options are available for preserving the family camp, cottage, or lake house?
While no one can anticipate every issue, a little planning can help to minimize future strife. Vacation homeowners often expect that their Last Will and Testament resolves questions concerning the property. A Last Will and Testament fails to address many of the problems that result from shared ownership and use.
Vacation homeowners should consider supplementing their wills with a trust or limited liability company (“LLC”). These entities provide the additional structure and rules necessary to ensure a smooth transition to the next generation and many fun-filled family weekends to come.
With the help of an estate planning attorney, a vacation homeowner can establish a trust or LLC to own the underlying property and set out express family policies upon their passing. Through a trust or LLC, a vacation homeowner can decide the terms under which the family may offer the property for sale.
It can establish a process for determining the use schedule and implement a mechanism for resolving disputes. By instituting the rules through a trust or LLC during life, a vacation homeowner can ensure, even after death, that the property remains a haven for the family for generations to come.
– Meredith M. Maller, Eaton Peabody