Do you own a vacation home? If so, you appreciate the opportunity it provides you, your children, grandchildren and other loved ones to gather and share happy times together. But after you’re gone and the home passes to the next generation, without proper arrangements in place, family harmony can suffer. George Vasiliadis, an attorney with the law firm of Vasiliadis Pappas Associates, points out that “children who inherit a vacation home, sooner or later, will likely disagree among themselves regarding its use, maintenance, and on other key issues.” So, if you expect this property to remain in the family after you’re gone, be sure to include provisions in your will that spell out how disagreements can be amicably resolved. Consider the following:
Ownership
Who will own the vacation home? If it passes to multiple owners, will they hold as joint owners and, if so, as tenants in common, with ownership eventually passing down to their heirs, or as joint tenants with rights of survivorship, in which case the surviving owners acquire the deceased owner’s interest? Alternatively, should the property be held by a partnership, or, instead, titled in a limited liability company? Your will should direct your Executor to consider these options and pass on the home in the most advantageous manner.
Use and Maintenance
Require the owners to establish rules for use and maintenance of the vacation home. These should include guidance regarding shared use; assessments, pro rata or otherwise, to cover expenses; voting procedures in the event of disagreements; and whether to appoint one or more of the owners (or a third party) to manage the property.
Transfer Restrictions
If one or more of the co-owners decide they no longer want to hold on to the property, give the others a right of first refusal to acquire ownership before it passes to someone outside the family. Include detailed provisions on how this happens, including financing terms.
Death or Involuntary Transfer
If an owner dies and ownership does not remain within the family, or if an ownership interest is seized, either through court order (including divorce), bankruptcy, or otherwise, such event should be specified as constituting an offer to the remaining owners to sell to them, under terms and conditions that protect the remaining owners.
Owner Default
If one or more owners fail to contribute their share of the expenses or otherwise default in the performance of an important obligation, the others should be permitted to divest the defaulting owner of his or her interest under specified procedures that are fair to all.
Conclusion
Of course, none of the numerous and complex provisions referenced above need be followed if the next generation of owners can all agree on alternative means to work out points of contention. But at a minimum, comprehensive vacation home provisions in your will or trust can provide a road map in facilitating resolution of problems with a minimum of acrimony and financial loss.
The lawyers at Vasiliadis Pappas Associates have helped maintain family harmony among the next generation of owners of vacation homes by including comprehensive provisions in the wills and trusts they draft. We can help your family as well. Call us!