Vacation homes are not synonymous with a cabin by a lake. But whether it's a place up north or a getaway in another state, Minnesotans greatly value their homes-away-from-home. Indeed, many families value them so much that they want to pass them along to the next generation.
Before taking action on that interest, however, it makes sense to talk with a Minnesota estate planning lawyer who is also knowledgeable about real estate law. There are several potential pitfalls that you will want to avoid as you consider whether - and if so, how - to keep a vacation home in the family.
Avoiding Sibling Rivalry
The first question you should ask yourself, if you have any more than one child, is whether to pass the cabin or other vacation property to all of your children. Potentially, transferring it to your children could cause tensions or inflame existing sibling rivalries.
Do your children really want to own a property together? The answer may very well be no, especially if the children don't get along that well in the first place. Even if the kids do get along, problematic maintenance issues may arise, particularly if the property is in a fairly remote location and is in a condition that requires a lot of care.
Keep in mind that the potential friction points in jointly owning a vacation home are many and various. It can easily create tensions when siblings try to equitably allocate costs that include taxes, repairs, utility bills, and insurance policies.
So think carefully about an intra-family transfer before taking action on it. It might be preferable to sell the property, rather than pass it along to children who may squabble over it. Ask yourself, in other words, what role the property could play in building your personal legacy.
Methods of Transfer
If you do decide to pass your vacation property along intact to the next generation, there are several different ways you can do it. There are a lot more options besides keeping it, letting it pass by will, or selling it outright while you're still living.
For example, you could set up a trust and fund the trust with life insurance proceeds. When the transfer is structured this way, an heir who wants to sell his or her share can do so, with the money already in the trust available to be used for the buyout.
This is only one option; there are others. Talk with a Twin Cities real estate attorney about which one best meets your specific goals.