Best way to pass vacation home to children

[cbird01]

Michigan - Elderly couple in retirement with sole assets being a lakefront cottage that they own free and clear. The home has been in the family for 40 years. The couples #1 priority is to pass it on to the children so that they can continue to use property and always keep it in the family. Will be taking out a reverse mortgage on property for living expenses until they pass.

The issue they are having is how to best pass the asset to children and how the children can hold/manage property. There are four children. Three of the children are not financially able to keep the property up/pay taxes/bills etc. The fourth child is willing to do this and wants the others to be able to use the property. What is unknown is whether it should just be passed to the one child or if it can be held in trust and financial responsibilities outlined in some sort of agreement(one child responsible for all taxes and bills and others need to contribute on a use basis only). It is more important to them that everyone is able to use the property and that it is kept up financially, than who ends up getting the financial benefit of ownership.

Nothing is set up in a will yet.

 

[xylene]

It is more important to them that everyone is able to use the property and that it is kept up financially, than who ends up getting the financial benefit of ownership.

Yeah, but you are ignoring the massive costs of property ownership.

Basically your plan is to saddle one child with all the costs, but a require he provide the benefit to permit the siblings use.

And the other siblings who aren't rich don't get any equity but they can use the house?

Its a tough thing but consider liquidation with the right of first refusal for those family members with means to buy (i.e. they inherit 1/4 and buy out the other siblings quarters.

I think your family needs to have a sincere conversation about this. One that isn't colored so heavily by rose colored memories of the great times a family lakehouse brings.

 

[cbird01]

Ok, let me clarify. No one is ignoring the costs of ownership. The one sibling would bear those costs fully knowing past expenses. The return would be having the equity of the home. None of the siblings have the financial well being to buy out everyone else at fair market value. The parents main desire is for the house to remain in the family and usable by all, not for equitable distribution if its value. The other siblings would retain the ability to visit the cottage while incurring no debt or expenses. While some may not like that they do not get any value from the equity...the parents desire to keep it in the family overrides this. There really is no way to maintain 1/4 ownerships with the complications of splitting expenses between siblings that have a hard time paying their bills currently.

 

[seniorjudge]

The parents main desire is for the house to remain in the family and usable by all, not for equitable distribution if its value.


Believe me, this causes huge problems.

Make sure the heirs can sell the place as soon as possible and split the dough.