Managing the Responsibilities of a Family Vacation Home
It’s a big responsibility for a family to maintain a vacation home or family cottage. The family must insure the family cottage, pay the taxes on the family cottage, and keep track of whose turn it is to use the family cottage. And what happens when the parents who built the family beach house or family lake house become infirm or pass away?
Planning for the Future: How to Ensure the Smooth Succession of Your Family Vacation Home
A family vacation home may represent a significant portion of a family’s wealth. If bought many decades ago, a family vacation home has likely appreciated in value many times over. Children may have grown up spending their summers living in the family’s beach house or lake house and the family may have strong emotions about keeping the vacation home in the family. Yet, a family vacation home has considerable expenses associated with it, including taxes, insurance and repairs. What will happen when the parents who built the family cottage are gone? Will each child be willing and able to share the family cottage equally? That is why you need to consider working with an attorney to plan for the future succession of your family’s vacation home.
The Risks of a Partition Sale: How Legal Disputes Can Impact Your Family Vacation Home
Vacation homes can become a legal quagmire. Every owner has a legal right to seek partition of the real estate. A partition suit asks a judge to either physically divide the property or to sell the property and divide the proceeds. With a family vacation home, a judge in a partition suit will usually order a sale and divide the proceeds. When parents give the family cottage to the children outright, they risk a partition sale if a child wishes to cash out her share of inheritance from the family vacation home.
Why might a partition sale occur? A child could get a divorce and the ex-spouse could receive a share of the vacation home in the divorce decree, then seek a partition sale. A child could incur debt for a business or lifestyle, or default on a loan obligation and/or file bankruptcy; a child could have his share of the vacation home liened, and the creditor or a bankruptcy trustee could ask for a partition sale. Even more common, a child could move away for work or love and seldom visit the vacation home. If the other children do not wish to buy out that child and the faraway child is unable or unwilling to share in the vacation home expenses, that child may exercise her right to file suit seeking a partition sale.
How an Attorney Can Help Plan for the Succession of Your Family Vacation Home
As you can see, vacation home succession planning is an important step in maintaining harmony at your family vacation home. At Cipparone & Zaccaro, PC, our attorneys help families create limited liability companies (LLCs) to manage and transfer the family vacation home in a thoughtful and fair manner, Our cottage succession plans can prohibit partition actions, while providing our clients the ability to set forth alternative and equitable solutions to the problems of multiple family members sharing the family vacation home. Our attorneys have experience with partition suits, so we know what is at stake, and our attorneys can help you consider the many issues you need to address to create a wise succession plan to keep your vacation home in your family for future generations to enjoy.
