Many people dream of having a vacation home. But while these homes can provide relaxation and time away from "real life", they can also present some difficult estate planning issues, as they have both financial and sentimental value. If you own a vacation home, you must carefully consider how you handle this asset in your estate plan.
One potential problem arises when the owner wants to keep their vacation home in the family and their heirs do not. For example, if you want to leave your four children the vacation home, there's a chance that at least one of them is going to want to sell the property. He or she may need the cash to pay off debts or may simply live too far away to get any enjoyment out of the property.
If the property is left to the children in your will as joint tenants or tenants-in-common, the one who wants to sell can demand to be bought out. If the remaining owners can't come up with the funds to do this, the one who wants to sell can force them to put the property on the market. A forced sale takes the asset out of the family and can easily create lasting tension between your heirs.
Putting the property in a limited liability company (LLC), however, will allow you to transfer interest in the vacation home to your heirs while still maintaining control over what happens to the property. An LLC's operating agreement can be written to clarify your wishes regarding the use of the property and prevent any of your heirs from initiating a forced sale.
Even if your heirs agree to keep the property in the family, you will still need to determine who will be responsible for maintenance and property taxes. If your heirs have modest incomes, it may be unrealistic to expect them to come up with the funds for these expenses without additional assistance from you. Property tax and maintenance issues can also be addressed in the LLC.
How Can We Help?
Hiring a skilled attorney is the best way to make sure your estate plan protects your vacation home and other assets. For more information, please call the Schweitzer Law Partners at (626) 683-8113 or email us at info@PasadenaLawOffice.com to speak to one of our experienced estate planning lawyers.