Estate Planning for the Family Vacation Home
Summer is here and for many of us, that means a trip to the family vacation home for a well-earned rest. Many vacation homes are passed down through the generations, storing up a wealth of family memories – which is why the family vacation home can become a bone of contention among family members when it comes to estate planning.
Here are some considerations when making a plan to keep a vacation home in the family:
Determine successors – putting a succession plan in place is key to avoiding family conflict over a vacation home. Your plan needs to take into consideration who will be responsible for maintaining the property and what the usage rights will be among all family members.
Ownership – There are several ways that successors can own the family vacation home, either through direct ownership, fractional ownership or having the property held in trust or in a separate corporation.
If shared ownership is being considered, you will need to draw an agreement that spells out who will manage and make decisions about the property, how the property can be used (i.e., rentals), who will pay maintenance and operations costs and buy-out provisions.
Capital gains tax – To avoid capital gains taxation on future generations, you may want to consider placing the property in a trust or corporation. You also have the option of purchasing life insurance to cover the cost of the taxes.
Some families have their property designated as a nature conservancy to reduce capital gains taxes, but this can be a complicated process with both pros and cons. A Bratton Scott estate planning attorney can evaluate your individual situation and advise you on the best way to avoid paying capital gains taxes on vacation property.
To learn more about estate planning for your family, call our South Jersey office today to schedule a time for us to sit down and talk. 856-857-6007