It’s true that a family cabin can be a beloved heirloom that moves down from one generation to the next. Many adult children have numerous fond memories, and they may want to bring their own children there as they grow older.
But it’s also true that doing this can be difficult and can raise some complex situations for families. In terms of estate planning, it’s important to consider what some of these challenges look like and how they can be addressed.
Ownership percentages can be an issue
First and foremost, you have to consider what ownership percentage everyone will get. Are there multiple people who all want to be owners? Are there any individuals who would expect to inherit but who may not want to be involved? Of those who do want to be involved, should ownership be split up evenly?
Covering the costs can be difficult
Additionally, a family cabin can come with a lot of costs that people may not really be aware of. It costs a fair amount to pay property taxes, do upkeep and maintenance and pay for property insurance. And all of that doesn’t even account for something like a mortgage if the property is not fully paid off.
Tax implications must be considered
It’s also simply important to consider the tax situation that this is going to create. In some situations, the taxable value of a property will increase when it is passed down. It’s important that those who are receiving the cabin consider this along with the other costs.
While setting up the documentation to guide this process, be sure you are well aware of the legal options that you have at your disposal.