Estate Planning for Your Vacation Home

The family vacation home, whether it is a cabin, cottage, house or condo, is often cherished for the lifelong memories and family traditions it provides. Many Michiganders want to keep their vacation properties in the family for their children and future generations. Estate Planning for keeping a vacation home in the family is important and involves many considerations, such as whether all the children will be able to use and enjoy it. Even if all the children plan to use the vacation home, will everyone be responsible and capable of paying for the taxes and maintenance? It is important to first have a conversation with family members to discuss keeping the vacation home in the family and the challenges that may be faced.

Using a Revocable Living Trust for Your Vacation Home

Using a Living Trust can help address challenges and allow parents to achieve their goal of leaving their vacation home to their children and future generations for continued enjoyment and memories.

Creating a Revocable Living Trust for the transfer of a vacation home to family members offers many benefits.

• Maintaining Control While Providing Long Term Planning. Setting up a revocable living trust during their lifetimes enables parents to maintain control and retain their use and enjoyment of the vacation home. At the same time, the trust can provide long term planning provisions for the ownership and use of the home for the benefit of future generations after the parents pass away.
• Save on Property Taxes. Under Michigan law, a transfer of ownership of real property results in an increase in the taxable value of the property. This increase in value that occurs after a real estate transfer is referred to as “taxable value uncapping.” However, Michigan law also has an exemption that allows the owners of a vacation home to transfer the property to their children (and certain other family members) without increasing the property’s taxable value as long as the property is not used for commercial purposes. Using a trust to avoid taxable value uncapping in a transfer of property can save a substantial amount in property taxes over the long term for future generations.
• Avoiding Probate and Maintaining Financial Privacy. A properly drafted trust can eliminate the need for the property to go through probate administration when the parents pass away. This maintains the privacy of the family’s financial matters and avoids probate costs and attorney fees.
• Addressing Future Ownership Issues. A trust can address ownership issues of the vacation home for future generations including decisions about selling the property and property management issues important to family members.

Contact an Attorney to Create an Estate Planning For Your Michigan Family Vacation Home

The first step to take in planning for the future for your vacation home is to talk with your family members about their interests in owning the property. and the responsibilities that come with it. The next step is to talk with an experienced attorney who understands Michigan real estate and estate planning for family vacation homes and who will help to determine the best approach for keeping a vacation home in the family and maintaining family harmony for future generations.

In my practice at Ager Law Office, I help individuals and families with all aspects of real estate and estate planning, including trusts for family vacation homes. From my Ann Arbor office, I serve clients throughout Washtenaw County. To talk with me about creating a trust for your family vacation home, a new estate plan or about updating your existing plan, call (734) 649-0784, send an email to bill@agerlawoffice.com, or use the online contact form.