Here in Maine (“Vacationland”), one of our favorite activities is going “up to camp.” People treasure their waterfront property and hope that it will remain in the family for generations. While it is impossible to control the future from your grave, you can increase the chances of the property staying in the family by placing the property in a trust or a limited liability company (LLC). Such an arrangement typically provides:
- Who will make decisions about the property. If you use a trust, the decision maker(s) will be called “trustees” if you use a trust. You might appoint one of your children as trustees, or perhaps all of them, to act as a group.
- The arrangement will state how decisions are to be made about the property: Will one person make decisions unilaterally? Or will decisions be made by a group, by majority vote?
- Who will pay property taxes, insurance, utilities and maintenance? Will it be shared by all members of the family who get to use it? What if one person can’t afford these expenses?
- How will a schedule be arrived at, enabling different family members to use the property?
- What if one of the beneficiaries isn’t using the property much and wants out of the arrangement? Will other beneficiaries be required to buy him or her out? If so, how will they decide on a price?
- What happens if a beneficiary dies? Does that beneficiary’s share go to the other beneficiaries? Or does it go to the deceased beneficiary’s children?
Families are often tempted to develop such an arrangement informally. However, this type of arrangement is complex, requiring the consideration of many possible scenarios as well as tax considerations. Therefore, it is essential to consult an attorney before deciding to go in this direction.
Sally M. Wagley assists older and disabled people and their families in the areas of elder law, estate planning and estate administration with the firm of Levey and Wagley, P.A. in Winthrop, Maine. Go to www.leveyandwagley.com.