That family beach, lake or mountain house may have changed over the years in use, enjoyment and in value. A primary planning objective for many of our clients is figuring out how to properly pass the vacation home on to the next generation for their use without fearing what would happen in terms of taxes, ongoing decision-making amongst family members and proper management.
For those concerns and more, consider the following when planning for a vacation home in your estate plan:
- Determine which family members are interested in inheriting the vacation home.
- Don’t presume they all want the house. Discuss it with them.
- You might be surprised with who wants the house.
- Consider the best structure to use to pass the property to the next generation.
- Depending on values and taxes, a gift now vs. leaving it later may be best.
- If there are multiple beneficiaries, consider setting up a family LLC or trust to help manage the property and decisions amongst the various owners and prevent disputes from occurring.
- Consider rules for use of the property.
- These can be structured in your estate plan, your separate wishes or incorporated in your LLC so ease of management is attained.
Vacation homes and properties can be a significant part of your estate plan due to their value and emotional connection certain beneficiaries may have. Considering, discussing and implementing a plan prior to passing the property onto the next generation is an even better gift to those beneficiaries than the actual property itself in certain instances.