Picture your family’s summer house. Maine is full of them – vacation spots that have been in the family for several generations and have too many memories to count embedded in their walls. Unfortunately, as families grow, these very spots can all too often become the cause of family strife.
Let’s say you are the owner of a summer home that has been a source of great comfort and joy for many years. Your children spent most of their summers there and are strongly attached to it. Their children are starting to come and visit, making their own memories. Meanwhile, the place is getting more expensive all the time (taxes and other costs are rising rapidly), and you are still paying all the bills.
You want the place to be preserved for the family once you’re gone and are willing to take steps to prevent it from being sold in the future. But you know the costs associated with keeping things up, and you’re uncertain where the money will come from in the years ahead. Are your kids really willing to pay for it once you’re no longer doing so? What should you discuss with your family, and when?
1. Start by talking to your family about interest in the home. Discussing what will happen when you’re no longer around isn’t an easy topic, but having a frank and open conversation will help determine the proper steps to take. Inevitably there will be differences in levels of interest, in desires to use the property, and in willingness and ability to pay for it.
2. Talk about the basics. Who’s interested in using the property and when? How much is each party willing to contribute toward expenses? Will the property be rented for some or a majority of the time? Should it be sold? Should an uninterested sibling be bought out on some terms and if so, what should those terms be?
3. Get everyone on the same page – now! Often parents dream of maintaining a summer home generations into the future so that their children and grandchildren can derive as much pleasure and satisfaction out of it as they have. Sometimes they take steps to try to impose that dream on their successors, without understanding clearly that there may be no great desire to maintain the property into future generations. Having these conversations early on (the earlier the better) can ensure everyone is on the same page.
Unless the home is to go on the market immediately, an LLC or something similar should be established as soon as possible, so the management of the property can be solidified. If you’re considering forming an LLC to keep the property in your family, our previous blog post “Using an LLC to Keep the Family Cottage in the Family,” has some great tips on getting started.
No matter what the ultimate decisions are, one thing is certain: any agreement is better than no agreement! More questions and answers regarding estate planning can be found here.
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