Beach houses, vacation homes, and family cabins are all beloved parts of family tradition. Parents raise their children going to the same place every summer, even when some of them were raised going there themselves too. When we talk about Estate Planning, however, a beach house presents unique difficulties that a regular home does not. Will your children be able to keep the vacation spot to take their children there one day?
Estate Planning is the process of working with an attorney to create a legally-binding process for what happens to your property and belongings (your estate) and your money (your assets) after you pass away. If someone dies without making an Estate Plan, the state of New Jersey would determine what happens to their estate and assets in probate court. That process is normally long, expensive, and stressful for their loved ones.
The best way to determine what happens to your beach house is to make the decision yourself in your Estate Plan. Here’s the first issue: leaving it equally to multiple people is a time bomb waiting to go off. If you have multiple children and leave them your vacation property equally, inevitably one of them will end up wanting to sell it for money down the line. If someone goes bankrupt or has credit issues, it could even be seized by the bank. That’s how your family’s beach house turns into a different family’s beach house.
If none of your children particularly want the vacation property, they can sell it and all split the profits equally. If one of them really wants it, they could buy it in a sale, or you could leave it individually to them. This would ensure that the property stays in the family while avoiding having it be split between multiple owners.
If you set up a specific owner of the beach house, you should also create a plan for how it should be run. You can create and leave behind a fund that covers the expenses of keeping the beach house, most likely in the form of a Trust. You can create a rental system and plan out a way to make profit off of the property. You can even go ahead and craft a system that helps decide when each kid can be there and for how long.
Some people think that Estate Planning is just signing a paper that says you want your money to go to your kids. That’s how you end up with eighteen grandchildren all equally owning a beach house and fighting over who gets to be there on the Fourth of July. At Dublin Packard, we set your family up for life. Contact Dublin Packard today to create an Estate Plan that reflects your life and plans for your future.
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Todd Murphy
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- Should I put my house in a trust? - July 26, 2023
