Whether you "summer" at a home-away-from-home that you bought recently or has been in your family for generations, have you considered what will happen to it later? Over time, it might increase in value. Including it in an estate plan will ensure it goes to the heirs you choose while you limit potential conflicts and protect it for the future.
Everyone's situation is different, so you need to find the right option for you. If you plan it right, your loved ones may enjoy fireside chats and other special moments at the property for years to come.
What to Consider in Estate Planning for a Second Home
Financially, a well-crafted estate plan helps you shield your vacation property from creditors, prepare for any taxes, and if you have the means, set aside money for its upkeep. Your plan can allow for a change of mind or important life events, such as a remarriage, a birth, or a divorce. Depending on your scenario, these are some issues to consider:
• Who you want to make decisions about the property -- an individual or a group -- in case you become incapable or die. The choices can include maintenance, paying for taxes, insurance, and utilities and the ability to handle those responsibilities.
• How you want the decision-maker to decide, whether by themselves or a majority or group vote.
• What may happen if a beneficiary later wants to surrender their share of the property and how they can. (For example, you can specify that they could sell it for a certain price.)
• Whether the trustee may sell the property with or without the beneficiaries' consent.
• What to do if one of your beneficiaries dies, divorces, remarries, or more children enter the picture. Also, among their beneficiaries, who should inherit their share?
• Whether you want to keep it in the family or rent it. If your family will stay there, you can create rules and a schedule for use.
It may seem hard to discuss your goals with loved ones, but having a plan is a good start. Because of the different parts involved, it's better to get your estate plan in writing.
A last will and testament might not cover everything. Depending on your situation, one option, especially in long-term care planning, is to form a trust. Family camp trusts or irrevocable trusts are common ways to pass down property to heirs indefinitely. A trustee will manage the trust and its assets for the benefit of one or more beneficiaries whom you choose. You can form a trust in a will or through a separate agreement during your lifetime.
Talking about your plan is one thing, but putting it into place is another, crucial step. Before you decide what to do, an estate planning attorney can advise you on the right option for you. We would be happy to help you protect your second home for future generations. Contact us online or call (207) 377-6966 today.