Many use their vacation homes to connect with family. Of course that has been altered in light of the pandemic but it’s still important to have a plan in place for what will happen to your vacation home now and in the future. This is a unique asset that holds sentimental as well as actual value so it’s important to start by thinking about the goals that you might have for the vacation home as it moves onto future generations.
Consider any applicable tax laws that might determine the impact that transferring it to another owner would have as far as tax benefits. A family can help to avoid many of the common obstacles and pitfalls that affect many families when a vacation home becomes part of an estate without proper planning.
You may not be ready to transfer your vacation home directly to the next generation if you are still using it or if you are concerned that your beneficiaries might not be ready to enjoy it. Some people choose to pass on a vacation home at the time of their death with other assets which gives children an equal interest in the home. This means that certain rights come along with the ownership in the home like the right to partition and use the property.
The benefits and the division of labor and expenses associated with maintaining the house, however, could be really difficult to enforce and overall unclear since a child could also leverage their ownership to transfer to other individuals outside of the family. Make sure that you think carefully about the care and ownership concerns following your death, such as restrictions on transfers, expense allocation and removal of the right to partition. These can be discussed with the help of an experienced advisor and using an estate planning attorney to verify that these have been properly incorporated into your estate plan.
Own a vacation home somewhere else in California? Let our Pasadena estate planning lawyers help you.