Passing Down the Family Vacation Home to Heirs and Beneficiaries
There are a number of difficult estate planning issues, few of which involve taxes. A frequent one is what to do with the family vacation home or similar property. Usually the parents have pleasant memories of family get-togethers at the place and hope that the children can continue traditions. But there are a lot of reasons why things don’t work out that way. The kids might live different distances from the house or have different financial situations. They might not get along as well when the parents aren’t around. Or they might have different attitudes toward the home when they are owners instead of guests. The list goes on.
You can read more about estate planning for vacation homes here. The article begins with a summary of actor James Gandolfini’s will and applies lessons from it and other families. You should fully discuss the family vacation home with your offspring, both separately and collectively, before making a decision. Then, if you decide to try to keep it in the family, carefully consider the structure and rules and try to leave a fund to pay annual expenses.
The plan should also answer questions such as: Should it be maintained for close relatives? Will the next generation use it together or separately? Is it the site of family reunions? If not, will it be available to friends or even renters? Another issue to consider is the next step — how to transfer the property to succeeding generations.
Some parents believe that if the cabin is left to some of the children, the others should receive other property of equal value, so they won’t feel cheated. Unfortunately, the cabin may be one of the family’s largest assets, so the only fair thing to do would be to sell the property. But even the ones who don’t want to use it may not want it sold.
Parents are often tempted to let their children work it out themselves. But with each generation, the number of heirs — and in-laws — grows larger, and it gets more difficult to reach a consensus.
