As the family gathers at the summer cottage or vacation property each season, the senior generation might think about how nice it would be for these multi-generational gatherings to continue for years to come.
Being proactive, the senior generation might ask their Warner estate planning attorney to help them design a plan for the continued use and enjoyment of this property by future generations. The Warner attorney will ask:
Does it make sense to pass the cottage to future generations?
Don’t assume that because everyone enjoys their time together at the property now, your children or grandchildren will be interested in shared ownership of the property in the future. It is important to ask questions and have honest conversations with the next generation to determine if it is realistic for your descendants to share ownership and use of the cottage.
If the next generation is interested in sharing ownership of the property, and there are no financial or estate tax issues to resolve in transferring the property, your attorney will want you to consider:
How would this joint ownership be structured?
There are basically three options for the form of ownership and use of a cottage by multiple households of a family, and each form has advantages and disadvantages. The family will have to weigh these and decide which of these forms makes sense for them.
Once you have chosen the form of ownership you want to use for the next generations, your attorney will want to discuss:
What type of agreement should be created to govern the use and management of this jointly-owned property?
A co-tenancy agreement, trust agreement or operating agreement is used depending on the ownership structure you choose. Regardless of the agreement type, you will want to build in flexibility for the future and address these issues:
If you are considering transferring a family cottage or vacation property to the next generation, Warner can help with the process.
For more information, see our Legacy Matters blog posts, Does It Make Sense to Pass the Cottage to Future Generations?, Ownership Structures for Shared Family Property and Creating a Governance Agreement for a Shared Property.
