The vacation home: Uniting or dividing?

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The Vacation Home: Uniting or Dividing?

One day the dream comes true, siblings inherit the most coveted possession, the family vacation home.

Everyone happily uses the home for family vacations and fun times for several years.  The property appreciates considerably and now one sibling wants to either sell the property, or have the other, buy out their half.

Co-owners of real estate have a right to their interest and can force the sale of the family vacation home, in court, if necessary. This situation is not at all unusual and, unfortunately, can create a lot of hurt feelings. One owner has no interest in the property, while another has strong ties to it, but can’t afford to buy out the other owner or owners.

The question for owners of vacation homes in planning their estates is the vision they have for the property. Do they see the property as binding their family together for generations to come as they continue to vacation together? Or are they more concerned about the issue of equity, in that some children are unlikely to ever use the property, while others may use it often?

Two estate-planning solutions are commonly used with regard to vacation homes. The first is to direct that the property be sold within a certain amount of time — often a year — after the surviving parent’s death. The children are given a right to purchase the property at a bit less than fair market value, called a “right of first refusal.” If none of the children exercises this right by the deadline, the property is put on the market. This solution has the advantage of finality and equity. Each child gets his or her share and is not tied to the other children for years to come.

The second approach is to put the house in trust for the family, or into a limited liability company. Usually one or two family members are named trustees, or managers, to manage the property for the benefit of all children and grandchildren. They can assess appropriate charges for use to cover the cost of upkeep and repairs. This preserves the house for future generations and may also avoid probate.

There is no right or wrong answer, just a question of the parents’ values and goals. A plan is almost always better than no plan. There is no guarantee that all heirs will be happy with whatever decision is made. In most cases they will accept what their parents or grandparents decided to do with their property. In terms of family harmony, it’s often better that any anger be directed towards the parents who are no longer there, than towards siblings who are still around.

Be Educated! Be Proactive!

SOURCELeonard F. Baer
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Leonard F. Baer
Leonard Baer's practice focuses on Elder Law, and Estate Planning. His previous experience was in the area of complex criminal litigation, serving as Deputy Chief of the Major Crimes Division for The United States Attorney’s Office in the Southern District of Florida. Mr. Baer was recognized by the Office of The Attorney General, as one of the top prosecutors in the country during his tenure. He has been included in North Carolina Top Rated Lawyers, a distinction awarded to those lawyers recognized by their colleagues as leaders in their field. He has also been recognized by the Florida Bar, for his efforts in representing seniors and their families, who are victims of scams and fraud. Mr. Baer is an AV rated lawyer listed in Martindale-Hubbell, and has been selected for inclusion in their Bar Registrar of Preeminent Lawyers, which for over 90 years, includes only those select law practices that have earned their highest rating. He has been designated by Martindale-Hubbell as preeminent in his field, and in the top 5% of all lawyers practicing in the United States. Mr. Baer has also been ranked by AVVO, an online Legal Directory of over 200,000 lawyers nationally, as Superb, their highest rating. He served as adjunct professor of Sports Law at The University of Miami, and is a frequent lecturer on the topics of Elder Law, Estate Planning, Asset Protection and Fraud Protection. He has been a columnist for several newspapers for over 13 years and currently has a nationally syndicated blog, “As I See It” with a readership of over 25,000.

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