Two-thirds of the summer have already blown past and still many Minnesotans who have a cabin have put off a vital conversation with their children. Whether you own a cozy cabin or a lakeside estate, your special place is full of great memories and home to years of family tradition. To keep the spirit of the place for generations to come, communication is key.
Forbes.com recently published an article with advice on ensuring the smooth transition of ownership of your property to the next generation:
Don’t work from assumptions. Many parents hold a strong attachment to their cabin–the memories the place evokes are a wistful reminder of watching their children grow up. Though it may forever hold a special place in your heart, it’s not entirely certain that your sentiment will be as strong among your children. Don’t assume; ask your children what future they see in the place. Many children will wish to carry on the traditions and joy of the place, but you may find they would prefer to sell it. Working out the facts will help you make a plan that’s agreeable to both you and them.
Do weigh the options. Plan ahead. A trouble-free transition for your cabin is dependent on everyone involved knowing what to expect. Unwanted gift or estate taxes may be incurred if you leave the property outright, and unwanted drama may be sparked should you leave it to your children as “tenants in common”–each owner has the right to sell, transfer, or mortgage the property, regardless of the others’ wishes.
Fortunately, there are other options. Ownership may be transferred via a trust or a limited liability company (LLC), either of which provides a number of benefits for the inheritors: protection of each child’s ownership interest in the property in the event of death or divorce, prevention of a forced sale, the establishment of rules in advance for the property’s use, and the provision of funds for maintenance.
Do set expectations. Discuss the matter early with the next generation of owners. Engaging them in the process will give legitimacy to whatever decisions are reached, and you may well find your children cover topics that you may have overlooked! Have a list of topics to be discussed going into it. How will the vacation home be used and operated? What rules must each owner abide by? Setting out a clear plan now will lessen the risk of conflict in the future and provide your children a way to diffuse negative feelings.
Now is the perfect time to discuss your future plans for your cabin with your family and your cabin planning attorney, who can assist you with planning a smooth ownership transition. Call our office today at (612) 206-3701 or fill out our contact form to schedule a time for us to sit down and talk about this in a cabin planning consultation, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security.
Image courtesy of www.skaneatelessuites.com/CC BY-SA