For generations, the children in your family have learned to swim by jumping off of the dock of your family’s vacation home. It’s a rite of passage for each grandchild to learn how to bait a hook from grandpa while fireflies flicker in the summer heat. The legacy of a vacation home is the pinnacle of the American Dream. Many people work their entire lives to afford a home in their dream destination. While you dream of passing down this home (and the memories) for generations to come, have you thought of how to protect this family legacy?
Leaving the family vacation home directly to your children may be the simplest way for transferring ownership, however, when multiple children are involved, they would all need to agree with how the property is managed and maintained in the future. These decisions are proven to be challenging not only for your children to agree on, but also their future spouses.
An LLC is often used by families, in which each family member would have a certain membership interest in the home or to give away in a controlled manner. If the home is rented at certain times of the year, the LLC can help limit the liability of the family and profits could be used to help maintain the property.
Trusts are another tool used to protect a family home. This legal agreement allows you to specify how you would like the property to be managed once you die. You can use the trust to identify who will own your vacation home, when they will have access to it, and what they will be allowed to do with the property.
One of the many benefits of placing your vacation home in a trust is to avoid probate. When you pass away, assets that legally belong to a trust will be passed on to your beneficiaries without going through probate. There are several trust options available to align with your specific needs. I few most common trusts are:
The house can be placed into an irrevocable trust with your children named as beneficiaries. The terms of the trust would outline the management and use of the home. An irrevocable trust helps to protect the family from possible creditor liens.
A revocable trust can be used to transfer the property to family members at the time of your death. This option can set up what is called a subtrust to manage your vacation home after your death. There is usually a set amount of money set aside in the trust to help care for the property for a period of time.
QUALIFIED PERSONAL RESIDENCE TRUST
This allows you to gift the property at a reduced value, while allowing yourself to use the property for a set amount of years, after that time has expired the home can transfer directly to family or to a trust for future generations.
Contact a New York Estate Planning Attorney
Preserving your family’s legacy of summers full of fun is important to avoid future family conflicts and avoiding litigation. Choosing the right financial structure for your family to enjoy and use the property will help guarantee family fun for future generations. An experienced estate planning attorney can help you to assess your unique needs and goals. Contact Amoruso & Amoruso, LLP for a personal meeting.