With the coming of spring, the family's thoughts often drift to the family cabin "Up North". Remember those sunny days relaxing at the lakeshore at your family cabin? The kids are playing in the sand or splashing in the lake. As the sun sets, you bring out the barbeque to the beach and grill hot dogs and hamburgers
Vacation homes are on the rise with families. The National Association of Realtors reports that a record 1.1 million vacation properties were sold in 2014, up 57% from 2013.
As the children grow up and get married themselves, some of them may want to use the family cabin and some may not. Although the lake cabin may have been an important part of their childhood, their own spouses or your grandchildren may be less interested in enjoying the cabin. Also they may not be inclined to dig into the work that it takes to keep the property in good condition.
Certainly cabin ownership involves repairs, taxes, utility costs and other upkeep matters.
Of course, a simple solution could be for the parents to sell the cabin, and leave the delightful memories of summers past leaving memories to the family photo album.
On the other hand, if the kids want to keep the cabin in the family, things can get sticky, says Liz Skinner, an investment business advisor.
Parents and their children or grandchildren should have a family council meeting to discuss the important cabin issues including:
1 How will the usage of the cabin be scheduled? Who gets the Fourth of July week? What is the fair way to share the all-too-brief weeks of a Minnesota summer? Who will administer these issues for the family?
2 How much time or money will each child or grandchild be expected to contribute towards costs and maintenance?
3 What happens if any child or grandchild decides they want out of the cost or maintenance arrangements?
If everyone in the family is on the same page as to details, it may be possible to handle things through joint ownership of all the family members. However, this solution relies on all family members (and their spouses) cooperating with each other.
Another alternative is to transfer ownership to a trust or to a limited liability company that the family can create for this purpose.
Mom and Dad could set aside funds to maintain the property for a designated period after their deaths. However, their estate plan would still have to specify how the property will administered, maintained and ultimately distributed to their heirs.
There are no quick and easy answers for all of these issues. The solution will be different for each family. Call us if you'd like to discuss any of these options.