Whether you call it a cabin, a lake house or your vacation home, your second residence is likely valuable. Even if it isn’t as big as and didn’t cost as much as your primary residence, it likely has a lot of emotional value.
You and your entire family may have spent summer vacations or holidays at that property. The emotional value of your cabin is as important as its financial worth when you decide what to do with it after you die.
Passing your cabin on to the next generation can be a great way to allow your children and grandchildren to add to the family history at the cabin. Unfortunately, you may not have very many assets worth as much as your cabin. How can you make passing it down fair to everyone?
Offer your loved ones the first right of refusal
Simply assigning the cabin to one person could lead to a very uneven estate plan. It could also lead to strain on the relationships between your children if they resent one another for the inheritance they received. Instead of passing the cabin to just one person, you can instruct your executor to sell the property. You could also attach a caveat to those instructions requiring that your family have the first option to buy.
By offering your family members the first right of refusal for the cabin, you ensure that the executor has to give your loved ones the right to make an offer first. One member of your family or several of them working together can offer the fair market value price for the property and purchase it before anyone else has a chance.
This approach ensures that the cabin can stay in the family if your loved ones have the resources to maintain it. It also ensures that each one of your beneficiaries can receive their fair share of the cabin’s value even if they can’t afford to buy it themselves.
You could also put the cabin in a trust
If you think that your family members won’t purchase the cabin or if you don’t want to risk them selling it to others, moving the cabin into a trust could also be a workable solution. You can give your loved ones access to the property without control over it. You can also instruct the trustee to eventually donate the land to a resource preservation society or historical organization.
Thinking about how to leave your cabin to your family will help you create the best possible estate plan given your family situation and personal assets.