Families with fond memories of a vacation home place significant value on that property, wanting to keep the vacation home "in the family." They envision their grandkids sharing the family vacation home and creating their own memories at the property. Before you pass on the family vacation home to your descendants, make provisions designed to keep the peace. Why? Shared ownership of a vacation home can be challenging.
Family members may disagree on who gets to use the property and when; on the extent that the property should be rented to third parties; on who pays for what expenses; on how to handle maintenance issues; and how the vacation home should be passed on to future generations.
Instead of leaving the vacation home to the family with an informal understanding of how these issues will be addressed, consider implementing a formal governance structure. Descendants may receive the family vacation home outright and then agree on a formal governance arrangement amongst themselves, or the original owners of the family vacation home may create the formal governance structure first then transfer the property to descendants. FORMAL GOVERNANCE OPTIONS include a trust, a written co-tenancy agreement, or a business entity such as a limited liability company, limited partnership, or general partnership.
Now you can go back to reminiscing about your family vacation home : - )
