Steps to Preserve the Cabin Legacy

With Labor Day weekend comes the unofficial end of summer, a time for that one last road trip to the cabin as we reflect on the glorious summer season that flew by all too fast. Our sanctuaries away from the hustle of everyday life hold some of the fondest memories where life seems simpler and all your worries melt away, at least until Monday morning. This is how it should be and how we wish it would remain, but without careful planning and consideration it doesn’t necessarily always stay that way.

On too many occasions I’ve witnessed client cabin retreats turn from a summer haven to a point of contention. Here is one typical scenario: as the cabin or property is inherited by the next generation trouble can start to arise for a number of reasons; the family patriarch is no longer around to make and enforce the rules, take care of the maintenance and foot the bills. Additionally, the heirs to the property now bring families of their own increasing the number of users and creating another new challenging dynamic to deal with. Here are three of the most common challenges with family sharing a slice of cabin paradise, lets review.

1. How will the costs of operating the cabin or property be divided?
2. Who will do the maintenance on the property?
3. What is the schedule for usage?

Division of costs can be tricky if there are not a lot of additional assets outside the cabin to be passed along to heirs. Some heirs may be in vastly different financial situations or different geographical locations.

Maintenance can be another sore subject again, as any second property owner knows there is a lot of work involved to keep everything in tip-top shape. Decisions will have to be made as to who will perform the upkeep or which tasks will be outsourced and hired out
Scheduling use of the property is more complex the larger the family. Some decisions about how scheduling will operate need to be considered. Will holidays be shared, will weekends be rotated, are there times only one of multiple heirs has access so they can entertain friends and family are among key considerations.

Communication to heirs is going to be paramount to ensuring they understand your wishes after your lifetime. Some heirs may not have an interest, in which case there can be ways to equalize the inheritance from other assets. For remaining heirs who wish for continued usage of the property it’s best to start setting expectations while you are still alive. This allows for discovery by both the grantor of the property and the recipients to discuss the 3 main points above as well as other concerns so the cabin trust can be drafted appropriately.  A quick example of why this is important: perhaps one recipient cannot afford taxes and utilities, but still wishes to use the property.  A discussion may then take place to agree on maintenance work, mowing lawn, dock removal, etc. as a tradeoff so the receiver in the lessor financial position feels they are contributing and the receiver in the superior financial position feels there is fairness in splitting ongoing management of the property.

Every family situation is unique, and careful planning should be discussed with a financial advisor to help identify important issues, flush out everyone’s wishes, and game plan a strategy to keep the cabin enjoyable for generations to come.

Your planner should then be willing and capable to work with you and an estate planning attorney to execute the game plan and draft a cabin trust which can be customized to address all the previously mentioned issues and a whole lot more.

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