Family Cottage Planning
Thorough estate planning is especially critical when a family “cottage” (or any sort of family vacation property) is an asset of the estate. When using the term “cottage,” we are referring to a Wisconsin cabin, Florida vacation home, Colorado mountain cabin, etc. Any form of real estate that will be held within the family for more than one generation needs the attention of an estate planning attorney who has a lot of experience in Family Cottage Planning.
Thorough Family Cottage Planning can achieve:
-
Avoidance of ugly conflicts between family members.
-
Avoidance of a partition lawsuit brought by a family member who wants to "cash out" their ownership interest.
-
Avoidance of a disorderly transition from one generation to the next.
-
Avoidance of scheduling conflicts.
-
Avoidance of unnecessary estate taxes.
-
A plan for how to structure the eventual sale of the family vacation property, and how the sale proceeds should be distributed.
-
A plan for who should make decisions concerning the family vacation property.
-
A plan for the payment of expenses related to the upkeep of the family vacation property.
-
A plan for how an ownership interest should be valued if a family member wants to sell their ownership interest, and who may purchase the ownership interest.
The centerpiece of our Family Cottage Plans is the Cottage LLC (i.e., Limited Liability Company). The Cottage LLC, in our opinion, is by far the best tool for achieving a thorough, efficient plan for transferring the family vacation property to subsequent generations of family members.
Following are some of the issues that a well-prepared Cottage LLC Operating Agreement should cover:
- identification of members of the Cottage LLC;
- identification of managers of the Cottage LLC;
- maintaining books for the Company;
- capital contributions to the Company;
- cottage endowment;
- rights of the members;
- decision making authority of the managers and/or members;
- withdrawal from the Company by a family member;
- transfer of a family member's interest;
- put and call options for sales of members' interests;
- scheduling use of the family vacation property;
- dissolution of the Company and distribution of sale proceeds; and
- many, many more miscellaneous provisions.
Establishing a thorough Cottage LLC is an advanced form of estate planning. Not all “estate planning” attorneys are capable of setting up and implementing Cottage LLCs. You should only work with an attorney who has a dedicated focus on Family Cottage Planning. The estate planning lawyer of Sylvester Law Firm, PC has such a dedicated focus. We welcome you to call us at (847) 251 – 2999 to discuss how a Cottage LLC can help you and your descendants. |