A family vacation home can contain a lot of important memories, and the generation who grew up spending quality time there may look forward to bringing their own children and grandchildren to the home for family reunions far into the future. However, there are certain considerations involved with passing a vacation home on to one’s heirs.
Before creating special arrangements for a vacation home in your estate plan, the first question to ask is whether your heirs actually want to own the home. A vacation home may hold strong sentimental value for some family members and not others. Economic considerations are also important, such as the cost of property taxes, whether the home must be rented out when the family is not using it, and whether there are enough other assets in your estate to provide for a more liquid inheritance as well.
If your heirs do want to keep the vacation home, then the form of ownership is a primary consideration. It may seem that the simplest method is to leave the vacation home to the family members you wish to inherit it, with ownership divided into portions. For instance, each of your children could own an equal portion. However, this may not be the simplest method for the heirs to deal with, as they would have to participate in making decisions about the property. An alternative is to create a trust that owns the property for the benefit of your children, with a trustee designated to manage the property in their interest.
It is also important to be aware that circumstances may change. As families grow and economic circumstances change, family members may disagree about whether the vacation home should be sold. You can build contingencies into a trust to allow for such situations. For instance, the terms of the trust could allow a majority of beneficiaries to force a sale, but provide a right of first refusal for any other beneficiary.