Aside from the relaxation and vacation related elements of our recent trip, I couldn't help but think about a growing area in the estate planning arena. The specific area that I am talking about it planning for vacation homes. In my research and experiences I have found no single asset that serves more as a lightning rod for family disputes than the vacation home. Although, it is still surprising to see the infighting over certain items of tangible personal property, but on a grander scale the vacation home is on a whole different level. I believe this to be the case because the family vacation home holds many fond memories for each member of the family. The intention is typically the same: We want to keep this vacation property in the family for many generations to come. I think that is a great intention to have and great plans have been designed to ensure just that. But as they say, "The best-laid plans of mice and men often go awry."
The point of this post is not to provide a checklist of exactly what
every vacation home owner should do to ensure that the family cottage
stays in the family. More than anything I am hoping that it will spur
the vacation home owners to spend some time thinking specifically about
this asset so they can evaluate their current estate plan or design a
new estate plan that furthers their objectives. Once the owners
determine what is important and what they hope to accomplish it is much
easier to design an estate plan to provide a solution. The solution
may involve a Family Limited Partnership ("FLP"), a Revocable or Irrevocable Trust, a Limited Liability Company ("LLC"), or an outright bequest at death or gift during the grantor's life. Deciding upon the proper approach and structure requires much more than an understanding of the tax and legal aspects. It depends on the family dynamic, sibling relations, and financial abilities of the next generation. In the area of estate planning for vacation homes, as is the case in many areas of estate planning, one thing tends to be true more often than not: Failure to plan is planning to fail.
