Whether you have a cabin retreat in the woods or a high-rise condo on the beach, your vacation home may have become a uniquely special place for gatherings with family and friends.
As you plan your estate, you may want to make sure this home away from home continues to provide joy to loved ones after you have passed. There are several estate planning approaches that can help you do this.
Leaving the property to heirs outright
One option is to give the property to your children directly. You can do this during your life or use a transfer-on-death deed that grants equal ownership between siblings after your death. To avoid potential conflicts, you can also create a Use and Maintenance Agreement that specifies rules and terms for sharing both the use and upkeep of the home.
Using a trust
With a revocable trust or living trust, you can keep full control over trust property during your life while specifying that your children will receive it after your death. With an irrevocable trust, you can gift the home while you are still alive. With either type of trust, the terms of the trust will provide instructions for transferring ownership and managing the home’s use and maintenance.
Creating a limited liability company
If your recreational home is also a valuable revenue-generating asset, it may be a good idea to set up a limited liability company. The LLC’s operating agreement can provide directions for managing both personal uses among family members in the company and terms for distributing shares of interest from any rental earnings.
It is never too early to begin preparing for the future. With the right estate planning tools, you can maintain both the sentimental and monetary value of your vacation home for generations to come.