One of the planning challenges we often run into is planning for the family cabin or vacation home. Often there are strong emotional ties to the vacation home by all of the children. But who gets to use the home when and who pays how much for property taxes and other expenses can often lead to significant conflicts. Many will try to continue to hold the home as tenants-in-common or joint tenants. If held as joint tenants ultimately the last person standing owns the home. With tenants-in-common as siblings pass away more and more grandchildren and great-grandchildren are added to the ownership puzzle. Further, problems can also arise with creditors of the individual owners or one or more of the owners trying to force a sale.
I have found that a great technique for dealing with such a vacation property is a Limited Liability Company (LLC) or Trust specially designed to own and manage the cabin or vacation home. The LLC or Trust is set up to establish a framework for the ongoing use and maintenance of the property. It prevents any one party from forcing the sale of the property or from subjecting the property to his or her debts and liabilities. Proper planning can avoid these problems as well as decrease the likelihood of a family fight down the road. Check out Kelly Greene’s recent Wall Street Journal Article: “Who Gets the Vacation Home” if you are interested in reading a little more on this subject.