The holiday season is a good time to reflect upon shared family time. Families with shared assets – such as vacation homes passed down from parents – may suffer friction or confusion in the use of the asset in the absence of clear mandates as to how the asset is to be shared. For instance, in the United States, a cabin in the mountains or a house on the beach enjoyed by the whole family when the parents purchased it may become problematic when the children grow up and move far away, or don’t have sufficient income to contribute to upkeep of the mountain cabin or beach house. How likely is it that adult children of the original owners will view issues about the use of the asset in exactly the same way unless their life circumstances are close to identical – and how likely is that? While Mother and Father, who purchased the asset to share with the family, are well and healthy they can certainly make the rules, including keeping the right to sell the place any time they wish. However, the family succession plan for the property needs to be established while they are young and healthy enough to deal with the issues. A succession plan should create a clear path for what the group will do if the parents are not able to make decisions any longer.
In the United States, there are several legal structures which can create customized plans for the property to deal with various contingencies. One is a trust, which can own the property and other assets sufficient to generate income to pay the costs of maintenance, repair, taxes, insurance, remodeling, and other assessments for a period of time determined by the creator of the trust. Another is a business entity, such as limited liability company (LLC) or limited partnership, which also can own real estate and other assets. A third is a simple co-tenancy agreement designed to come into effect when the children become owners. All of these legal arrangements, and any others available in the country in which the asset is located, can work well and can be customized for specific family goals. There are basic issues which should be addressed in any of these agreements or legal structures, including discussion and plans for any final disposition of the property.
No cookie-cutter plan is right for all situations. Contact the estate planning department of your Ally Law member firm to address issues relating to joint family-use assets well in advance of an uncomfortable situation regarding use of the asset. Ally Law member firms around the globe have attorneys skilled in the legal and tax implications for any structure or agreement concerning your valued family assets. For more information about Ally Law member firm services and outstanding lawyers, contact us at mailto:email@example.com.
Click here for the original article by Ally Law member Moye White LLP.