| Now that autumn has officially arrived, many | | | | transfer your interest into a limited liability |
| people have spent fond memories of visits with | | | | company, which will protect your family from a |
| their family in a vacation property. Perhaps you | | | | lawsuit if someone slips and falls on that property. |
| own a vacation property in Michigan along the | | | | It may also provide some level of asset |
| water or at Eagle Ridge in Galena on the golf | | | | protection. |
| course. Wherever the property is located, one | | | | If you decide to use the limited liability company, |
| important question is how to keep the vacation | | | | you should have rules in the form of an operating |
| home in the family after you have passed on. | | | | agreement that will indicate how decisions will be |
| All vacation homes require maintenance from | | | | made with respect to the property, what to do in |
| painting, sealcoating decks, replacing HVAC units, | | | | the event that the property requires |
| replacing roofs and on and on. If you have a | | | | maintenance, when additional funds may be |
| number of children, how will they determine who | | | | needed for the property, when the property |
| will pay for these items? How will they decide | | | | should be sold, who will be the manager of the |
| which child can use the residence and when? Can | | | | property, to name a few. These are all important |
| your family even agree on decisions of this nature | | | | decisions that will hopefully keep the family from |
| once you are gone? | | | | disputes when you are no longer around to settle |
| One of the first things to do is to talk with your | | | | them. |
| adult children about whether they wish to have | | | | In addition, to include your family in the limited |
| the vacation home stay in the family. Many times | | | | liability company, you will need to make gifts of |
| you may assume that the children who enjoy the | | | | part of your interest in such company over time. |
| use of the home while you are there will want | | | | Under current tax law, you may make gifts of |
| the responsibility of maintaining the residence and | | | | $12,000 per person per year ($24,000 if your |
| paying the real estate taxes and other expenses | | | | spouse joins in the gift) before using some of |
| on the property. This may be an incorrect | | | | your lifetime exemption amount. You will need to |
| assumption, as your children may be raising their | | | | consult with your tax professional or estate |
| own children and have inadequate time or | | | | planning attorney to decide what is appropriate in |
| resources to even use the vacation residence. | | | | the way of a gift to your family members. |
| You may be surprised with the answers that you | | | | There are a number of other ways to handle the |
| receive from your family. | | | | transfer of the vacation residence to the next |
| If you find that your children do not want to | | | | generation and keep it in the family, such as a |
| keep the house in the family, you may wish to | | | | qualified personal residence trust, a cost-sharing |
| sell the property when the real estate market | | | | arrangement or a partnership. Whatever way you |
| improves. If, however, you find that your children | | | | may choose, it is best for you to be the one |
| really enjoy the property and intend to use it with | | | | making the decision during your lifetime to |
| their families, then there are choices of what to | | | | minimize friction among your children about the |
| do with the property. For instance, you can | | | | use and care of this vacation residence. |