Estate planning is about more than passing on assets, it is about passing on a legacy, and a way of life. As a recent article explains, one way parents can pass on their way of life is to preserve the family vacation home for their children.
There are two common concerns parents face when determining how to pass on the family home: (1) the cost of maintenance on a property can often make it difficult for heirs to maintain it, and (2) joint ownership of a property between several siblings often leads to disagreements concerning how to use it and whether it should be sold.
One way to preserve the vacation home while avoiding these concerns is to create a trust to hold title to the property. The trust should be funded well enough so that it can pay for any necessary maintenance fees. Additionally, the parents could create a limited liability company (“LLC”) to hold an endowment within the trust. By adding this layer, the trust will not incur custodial fees because, legally, it does not hold any money. Finally, when drafting the operating agreement, parents can set rules for the use of the property to avoid any conflict between the siblings.