Leaving a Vacation Home to Family
We all know the road to you know where is paved with good intentions. Nowhere is this more true than leaving a vacation or beach home for the children to share after the parents have passed. We have often advised that if they are all happy and get along well this might very well lead to the end of those good feelings and relationships.
Inevitably, some will do more work on the premises than others, some will use the premises more than others, there will be disagreements as to maintenance and repairs. Some may never visit or use it at all.
Initially, all expenses tend to be shared equally, since all are equal owners. The foregoing issues, however, will quickly arise and then it will often be difficult or impossible to determine what each child’s fair share of the expenses should be. The one living across the country who never visits may insist that they be “bought out” or, if that’s unaffordable to the others, that the house be sold so that they can get their share.
Sooner or later, one of the siblings dies and their share goes to a sister-in-law or brother-in-law who may remarry and bring a stranger into the shared arrangement. Or let’s say an owner of one-third of the house dies, and now their share goes to their four children. How is that going to work?
Vacation homes are an excellent example of why good estate planning is often more social work than legal work. In these cases we anticipate the problems and spend the time to figure out who wants and uses the home and perhaps leave it to those children only and compensate the others with money or other assets. If they all use and enjoy the home, we sometimes require that it be held jointly with the right of survivorship, allowing the last of the joint owners to decide who to leave it to.
Correction: Last week we advised that inherited IRA distributions may be delayed until the tenth year. Under new regulations, distributions must be taken every year if the decedent had already begun their required minimum distributions.