As an estate planning attorney, my clients often ask me what they should do with the family cottage, cabin or hunting land “up north.” In a typical situation, Mom and Dad purchased the property years ago at a bargain, and now the children and grandchildren treasure it as a place to gather as a family.
When We Have Real Estate to Leave Behind
- How do we ensure the family will continue to make wonderful memories at the cottage for generations to come?
- How do we plan for the work and expense of maintaining the cottage so there is peace and harmony among family members?
- What happens if someone wants out?
- How do we eliminate the financial burden of maintaining the property?
The reality is that we cannot guarantee family harmony for multiple generations, but there are certainly things we can do to clarify Mom and Dad’s intentions for the property. There are also mechanisms we can use to create order as the property is maintained, and in the event that a family member wants out.
Trusts and Limited Liability Companies
When leaving a legacy of real estate, trusts and limited liability companies (LLCs) are two options to consider, and the choice between the two will depend on a number of factors.
Trusts can work well when decisions will be made by one person or trust company, and when we want to eliminate the buy-out option and simply hold the property intact for a certain period of time. LLCs can be a great choice when we want decisions to be made by a majority vote of family members, and when we want to provide a way for someone to be bought out of their interest in the property.
Regardless of how the cottage passes to the next generation, documenting your wishes can lead to greater success in keeping the property in the family as a lasting legacy.
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