If you’re like many Minnesotans, you own a lakeside vacation home or mountain cabin here — or maybe in Wisconsin or up in Ontario. Or, perhaps you have a place in Florida or Arizona where you escape the brutal cold for a few weeks or longer every winter.
If this home – whether it’s small and rustic or expansive and modern – has many cherished memories, you likely want to keep it in the family as a legacy. As you do your estate planning, it’s important to consider carefully how to handle this vacation property. If you don’t, it can become the source of family conflict and potentially end up being put up for sale.
Who wants it?
Before you address the property in your will, find out who (if anyone) wants it. If you only have one child, that’s fairly easy. They may want it for their family or to use as an Airbnb or rental property. However, they may have no interest in it or simply not want to pay the taxes, maintenance costs and more. If they do want it, the simplest strategy may be to leave it to them in your will.
What if you’ve got two or more children and they’d all like to keep it in the family? That’s when it can get complicated. If you leave them all equal ownership, they can end up fighting over what upgrades need to be made, how the costs will be divided and when or if to eventually sell it.
Placing the home in a trust
Some people choose to place a vacation property in a trust. A trustee (typically not one of the beneficiaries) would essentially manage the property and make decisions based on your instructions. Your children or other heirs would be the trust’s beneficiaries.
You may want to provide money in the trust for the upkeep of the home. If it’s rented out for part of the year, the rental income would go to the trust.
You will likely need to provide compensation for the trustee if you decide to place the home in a trust. Your estate planning attorney can review all your possible options with you based on your wishes and those of your intended beneficiaries.