Cottages and vacation homes are special assets. Many times they have been in your family for generations. There are several legal issues that arise with cottages that don’t arise with other assets like your home and finances. For example, maybe one child uses the cottage but other children don’t. Maybe some of your children can afford to maintain the cottage and some of them can’t. Maybe some of your children would want to keep the cottage but some of them want to sell it.
There are several ways to deal with these issues. The first is the structure of ownership. If you leave the cottage outright as “tenants in common” to three children for example, any one of the children can force the sale of the cottage. If you leave the cottage to children as “joint tenants with rights of survivorship” (which I rarely recommend), no one can sell the cottage. Many times it’s best to leave your cottage in an entity (limited liability company, trust, etc.) In that way, you can control who manages the property and the terms under which the property may be sold. You can also give one or more children an “option” or “first right of refusal” to purchase the cottage if the others want to sell.
This area of the law can be complicated and full of landmines if you don’t plan correctly. Give us a call or email us for a free consultation about your cottage planning.
Glenn Matecun is a partner with the law firm of Matecun, Thomas & Olson, PLC in Howell. He is an attorney focusing on estate planning, elder law and senior Veterans’ benefits, and answers readers’ questions on legal matters affecting individuals, their families and their businesses. Email questions to [email protected], or if your question is urgent, call (517) 548-7400. Visit us at www.MichiganEstatePlans.com. The information in this column is not intended as legal advice