Betsy Fisher and her two brothers inherited their parents' vacation cottage on Michigan's Big Glen Lake 12 years ago after their father died. They love the place, and they remember with fondness the picnics, the sailing and other summertime moments with their parents, each other and their cousins. Now they have their own children — a total of 10 teens and young adults — who also savor visits to the four-bedroom cedar home. "It brings back all these yummy memories of being a kid, playing in the yard and going fishing with Grandpa," Fisher says. The three siblings are determined to keep the cottage in the family for years to come. This summer, they took extra time to discuss the short- and long-term needs of the cottage.
Vacation homes have been the backdrop for many beautiful family memories. However, experts say you need to be careful in planning so the home's future isn’t the source of feuding. The biggest mistake owners can make is to fail to make a detailed plan for the home's future, cautions a recent Kiplinger's Retirement Report article titled "How to Pass Down a Vacation Home."
If an owner says “I don't care, I won't be here,” it rarely leads to a happy result. As we always say, besides honesty, communication is the best policy. Owners should meet with their adult children and spouses to create a plan for either keeping the vacation house in the family or selling it. Families can also get help from an experienced estate planning lawyer to develop ideas and plans.
If you decide to keep the house, draft a written plan to detail how to pay for expenses like repairs, insurance, and real estate taxes. Also, family members should develop ways to reduce tensions over the time they spend on maintenance. Some have a rotation for maintenance work so there's a sense of fairness. Hiring a cleaning service or property manager can also reduce hard feelings.
Deciding how to transfer the property to future generations is critical. Again, you should check with an estate planning lawyer to figure out the gift and estate tax implications. Working through these types of issues in the open with everyone involved will help the family enjoy the vacation home to its fullest without all the worries of the future.
You can learn more about this topic as well as other strategies on our website under the tab entitled: estate planning in Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning.
Reference: Kiplinger's Retirement Report (December 2014) "How to Pass Down a Vacation Home