What Will Happen to Your Family’s Vacation Home After You Pass Away?

Whether your vacation home is a waterfront estate or a simple cabin in the woods, if you want to keep that home in the family after you pass away, you should have the advice and assistance of a San Antonio estate planning attorney, and you should contact that attorney promptly.

When you plan what will happen to your family’s vacation home, you may have a variety of questions: What will happen to the property if one of your children dies, divorces, cannot pay his or her share of the expenses, or wants to sell his or her interest in the property? Sometimes, when a vacation home has been in the family for many years, there are sentimental attachments that can lead to family squabbles over possession. You will need to prepare a vacation home succession plan that addresses these questions precisely and effectively.

A vacation home succession plan is an estate planning strategy that helps you successfully pass on your vacation home and maintain it within the family for succeeding generations. A San Antonio estate planning lawyer will help you create the vacation home succession plan that is right for you and your family.

Should You Have a Vacation Home Succession Plan?

There are several ways to keep your vacation home in the family. However, before you establish a succession plan for the home, find out how your family members feel about it. Do other family members genuinely want to keep it in the family?

Be realistic and practical about whether your family’s next generation can afford the vacation home’s taxes, maintenance, and associated costs. If everyone agrees to keep the property and is prepared to meet the responsibilities and expenses, consider the following ways to make it happen.

Should You Transfer Your Vacation Home Directly to Your Children?

The simplest way to transfer a property is simply signing over the deed. However, this may lead to unexpected complications. If the children own the property equally, disputes about its use and management may arise. If one child is determined to sell his or her interest, he or she can force the others to either buy out his or her interest or sell to a third party against their will. Do your children work well together?

If you transfer a vacation home by deed, your children may prepare a “Use and Maintenance Agreement” to set the terms for the home’s use. When each child has an interest in the property, they have a right to transfer their share to their own children or to give away or sell their shares.

However, if one of your adult children becomes enmeshed in an acrimonious divorce, for example, that child’s ex-spouse could end up owning a share of the vacation home. That is one reason to consider options other than directly transferring your vacation home to your children.

Should You Establish a Limited Liability Company?

For many property owners in Texas, the central element of a vacation home succession plan is a vacation home limited liability company (LLC). There are several benefits for family members who own a vacation home within a limited liability company rather than directly. Your LLC operating agreement may include detailed rules for using and managing your vacation home.

First, determine who should receive shares in your vacation home. Then, when you place your vacation home in your LLC’s ownership, you can give away shares in the limited liability company all at once or over time. You can have voting and nonvoting members of the LLC.

What Are the Benefits of Establishing a Vacation Home LLC?

When a San Antonio estate planning attorney prepares it, your vacation home limited liability company document can restrict the home’s ownership by bloodline and allow only your family members to become owners.

A limited liability company can prevent ex-spouses, creditors, and other non-family members from acquiring ownership shares in your vacation home. It is also a good option if you and your family use the vacation home as a rental property or offer it through Airbnb or Vrbo.

As the name suggests, a limited liability company can limit liability. Any profits from the vacation home may be used to offset the home’s expenses, helping your family maintain the vacation home and property for years to come.

Is It Better to Transfer Your Vacation Home Into a Trust?

Another way to plan for the succession of a vacation home is to create a trust and place the home in the trust’s ownership:

  1. For instance, you may prepare an irrevocable trust that names your children as beneficiaries. The trust’s terms should govern the home’s management and use. An irrevocable trust will shield your family’s vacation home from creditor liens.
  2. You may use a revocable trust to transfer the vacation home to family members upon your death. A revocable trust can provide precise terms for how the property will be managed, rules about when and how to sell the home, and who has the authority to sell.
  3. A Qualified Personal Residence Trust lets you gift a vacation home to your children at a reduced value and lets them use the property for a set term of years. When the term ends, the home may transfer directly to the children, or it may be held in trust for the next generation.

Each of these trust options lets you keep your vacation home in your family. The trustee of the trust will have the duty to look out for everyone’s best interests and will also have control over the decisions to be made. While an LLC gives the family members a vote, the trustee can act without the others’ approval. A Texas estate planning lawyer can help you decide which option is best for you and your family.

Who Should Prepare Your Vacation Home Succession Plan?

San Antonio estate planning lawyer Laura D. Heard knows how to protect your family’s properties, savings, and other assets. If you are in or near the San Antonio area and have not started the estate planning process, now is the time to contact South TX Family Law.

Attorney Laura D. Heard has advised and represented families in the San Antonio area since 1987. Along with a vacation home succession plan, South TX Family Law can prepare a will, trust, LLC, power of attorney, or any other document your estate planning requires.

Many people procrastinate making the decisions on what to do with the vacation home, but no one knows when exactly they may die, and then it is too late to have any influence on what happens. It is important to start the discussion with your family and get information from your attorney so that you can make an informed decision before it is too late. Failure to plan can lead to the family losing the property altogether.

To learn more about estate planning or to set up a vacation home succession plan, call South TX Family Law at 210-775-0353 to arrange your first consultation with our estate planning team. Our team will work on your family’s behalf for the results you need.