Leaving a cabin or vacation home outright to your loved ones can create more family conflict and problems than you might think. While the property may have been a peaceful haven for you and your spouse throughout the years, your children may not look at it the same way when it becomes theirs to manage and maintain.
In fact, many heirs of recreation property are simply unable to afford the yearly property taxes and related maintenance costs. What mom and dad meant as a blessing actually becomes a burden to the children who were not prepared to assume these new responsibilities.
And what about those heirs that live too far away to enjoy the vacation property regularly? Should they be held just as responsible for its upkeep as siblings and cousins who live nearby and are able to use it on a regular basis? What kind of alternative might be available for them?
This is where working with a Minnesota estate planning attorney can be extremely valuable for families that need more flexible options when passing down a cabin or vacation home. For example, the original owners of the property may choose to place the property into a trust, meaning that a trustee would manage the home, and that (as much as possible), maintenance, taxes, repairs, etc. would be paid for out of the trust. It may even be possible for some of the heirs to be “bought out” of their share by using funds from the trust.
Another advantage of placing the property into a trust is that it can help if there are family tensions at play. The trustee can be someone outside of the family whose only interest is to preserve the property and the trust in an appropriate manner. He or she may even determine that the property can be rented out to generate income if the trust is having trouble paying for maintenance.
It is also possible that some members of the family will simply be uninterested in the property. For this reason, your estate planning attorney can set up an exit strategy that allows some heirs to purchase the shares of others, even using other assets from the estate. In preparation for such an event, the trust can even include an exit strategy that allows for the sale of the property with proceeds going to living heirs.
The most important thing to keep in mind is that you have options, and a Minnesota estate planning attorney can help you put the right plans in place to protect your property and the best interests of your family.
Have questions about the best ways to pass your cabin or vacation home down to the next generation? Contact our Monticello estate planning law firm today.