Growing
numbers of families – as older parents move into their 80s and 90s – are
finding themselves grappling with the transfer of second homes.
If you have a family vacation
home, have you considered what will happen to the property after you are gone?
While you are undoubtedly enjoying the memories you are making in your second
home, the reality is you will have to transfer the property at some point.
Transitioning the family
vacation home can bring out the best, and the worst, in families. Proper
planning in advance can be the key to saving the vacation home – and the
family.
MarketWatch recently provided some helpful pointers in an article
titled “Avoiding family feuds over vacation homes.”
Aside from the obvious sibling
rivalry issues or parental favoritism (real or imagined), there is the issue of
the next “owner.” If you choose one side of the family or one adult child to
take up ownership, then you risk slighting others and risk the “family” part of
the family vacation home. If this is a concern, then you might want to consider
creating an “entity” to own the property.
To allow the ownership of the
home to be spread out evenly among family members, consider forming a Limited
Liability Company (LLC). This approach can give certain family members a
membership stake in the ownership of the home itself and a forum for polite
discussion about it.
Alternatively, you might
consider a trust. The original article stresses a few standby forms of trusts;
the Qualified Personal Residence Trust (QPRT) and the simple revocable trust,
both of which have their strengths in terms of ownership transfer, conflict
mediation, and even some hefty tax benefits if you plan correctly.
Ultimately, the approach you
take will depend on your unique family dynamics and the home in question. There
is no one-size-fits-all approach.
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Reference: MarketWatch
(September 16, 2013) “Avoiding family feuds over vacation homes”