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One Easy Way to Keep the Lake Cabin in the Family: A Minnesota Cabin Trust

Lucere Legal helps cabin owners keep the cabin in the family with cabin estate planning
Categories: Cabin Planning

The emotional value of a family lake cabin is enormous, for every member of the family. Lake cabins are where cherished family memories take root and endure through the years. Should you be fortunate enough to own one such keepsake, its preservation for current and future generations is of vital importance.

The Wall Street Journal recently explored using trusts to safeguard a family vacation home in an article by Alex Coppola. When the current owners – parents or grandparents – are concerned that joint ownership could lead to unfortunate disagreements or that the cost of maintenance may prove too significant for the next generation to manage, a trust can be the best solution.

Rather than dividing ownership, a trust can be established to hold title of the property and fund an endowment to handle maintenance expenses.  Moreover, you can set up a limited liability company to hold the endowment within the trust to avoid paying custodial fees on it.

As soon as the LLC is registered in the state where the lake cabin is situated and the trust is created, it is time to draw up a legal operating agreement that nails down when the property title and endowment would be transferred into the trust, most often upon the death of the current owner.

The operating agreement would also specify how the property is to be used, and grant each member of the next generation the right to equal access to the property.  This is often advantageous compared to granting equal shares in a property, since it prevents any one shareholder from cashing out his or her share and jeopardizing the use of the property by generations to come.

As noted within the WSJ article, it is typically preferable to have succeeding generations designate a property manager from within the family to make the key administrative decisions and coordinate the use of the property so it is shared equitably.

To preserve your beloved lake cabin for many generations to come, using a trust is the best guarantee. And just as importantly, it will preserve the family harmony that the cabin has played such a key role in developing.

To learn more about this, go to our cabin planning website, and take the time to work through The Minnesota Cabin Planning Guide and Workbook.

If you would like some guidance on establishing a cabin trust, 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.

Image courtesy of Phiseksit/FreeDigitalPhotos.net

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Do you have a cabin?

The first generation that buys a cabin enjoys it to the fullest and it’s a magical place where happy memories are made and families go for some much needed respite. Unfortunately, without thoughtful planning, the chances of the cabin staying a place of happiness and tranquility into successive generations is very, very slim.

If you haven’t done the planning in advance and made it legally binding, the family members (and their ex-spouses and new spouses) will have to work every detail out for themselves. If they can’t, what is likely to happen is a lawsuit called an action for partition that forces everyone to sell their interest. This lawsuit is expensive, and the costs of litigation will come out of the proceeds of the sale of the cabin, so to add insult to injury to those who wanted to keep the cabin but couldn’t afford to buy the others out, they are footing part of the legal bills in the lawsuit against them. Ouch!

It’s no wonder that family members stop speaking for years after the cabin conflict is “resolved.” You can’t make family relationships perfect, but you can take away much of the fuel for the family conflict fire. That’s what cabin planning does, and it has the nice side effect of giving you peace of mind now.

That’s why Kimberly wrote The Minnesota Cabin Planning Guide and Workbook, and you can get a free electronic copy of her book on our cabin planning website, or you can find it in many county libraries in Minnesota, or you can get it on amazon.com.

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