MoneyDo: Start A Conversation About The Family Vacation Home
Estate planning can be difficult to undertake for a variety of reasons, including the process of considering who will inherit your wealth upon your passing. Financial accounts and assets feel – and often are – easier to plan for because they can be easily divided among your heirs.
However, a family vacation home, hunting land or family farm present a new set of challenges that add complexity to estate planning. Unlike most of “YOUR” estate plan where you get to make decisions without family input; it’s critical to involve the next generation in planning for transferring the vacation property, hunting land or a family farm.
This week’s Money Do: Start A Conversation About The Family Property. We’ll give you some talking points that will help facilitate a family conversation on how to plan for passing that special property as a family legacy.
Before we get into the discussion about how to evaluate your options with family, make sure your financial plan is sustainable, and that you can continue to maintain the property over the long term.
Once you’re confident your plan is on solid ground, then you can open up the conversation with the following questions:
1) Who should receive the property? vs. Who wants the property?
While all of your children may enjoy the property and recognize it as a source of many great memories, there’s a chance your child may have their own vacation home and aren’t interested in partial ownership of yours.
2) How much are the property’s annual, ongoing expenses? How will those be paid for by future owners after you’re gone? Are the new owners going to be required to contribute equally to those expenses? Are you going to leave cash to those as well to help offset future maintenance? Are they 100% responsible going forward from their own pockets?
3) If there are multiple family members, what will be the rules for use or other important decisions that may arise? It may not work well if everyone wants the week of July 4th! What about if grandchildren or friends want to use the property?
4) When will you pass the asset on to the next generation? During life or after death?
5) What should be the ownership structure? Tenants in Common, a Trust, an LLC?
While these five questions are a good starting place, there are quite a few more factors that can be important to consider as well, and if you’d like to learn more, make sure to look for one of Annex Wealth Management’s upcoming “Saving The Family Cottage” workshops.
As you start to gather answers to some of the key questions, it will be important to check in with your financial advisor and work with an estate planning attorney to get the legal documents in place to effectuate your plan.