This month we teamed up with Meredith Maller from the law firm Eaton Peabody to provide you with information on an estate planning topic that we often discuss with our clients.
During this difficult time, many families are seeking 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, however, the death of a vacation home owner turns what was once a sanctuary into a catalyst for intra-family fights. Shared ownership generates enormous stress, and even animosity, if co-owners aren’t in agreement and there’s 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 the unexpected circumstances, such as death, divorce, bankruptcy of a co-owner, 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 advance planning can help to minimize future strife. Vacation home owners often expect that their Last Will and Testament will resolve questions concerning the property. Because a Last Will and Testament fails to address many of the problems that result from shared ownership and use, vacation home owners 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 home owner can establish a trust or LLC to own the underlying property and set out express family policies upon his or her passing. Through a trust or LLC, a vacation home owner can decide the terms under which the family may offer the property for sale, 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 home owner can ensure, even after death, that the property remains a safe haven for family for generations to come.
– Meredith M. Maller, Eaton Peabody
Means Wealth Management is a registered investment advisor and provides this material only for informational and educational purposes. No estate planning should be considered without the assistance of a qualified legal, tax and financial professional. The presented material is not to be construed as a recommendation or advice regarding a security or strategy.