The time and effort invested in the creation of a thorough estate plan allows a testator to establish a meaningful legacy. With the right plan, people can control the descent of their property and have a positive lasting impact on their communities.
Frequently, high-value assets are a focal point in any estate plan. People worry about who might inherit their investment accounts or their primary residences. Many well-established professionals in West Michigan might also own secondary real estate investments. Many people have hunting land or cabins up north. They may have a lake house on Lake Michigan or on one of the many inland lakes scattered throughout the state. Those secondary real property holdings require careful consideration during the estate planning process.
What becomes of a vacation property?
Testators often have to think carefully about what to do with a vacation property such as hunting land or a lake house. In some cases, they may simply want the property to pass to their surviving spouses or children. Other times, they may need to come up with more creative solutions.
Joint ownership of the property could cause conflict among their children. Some people may prefer to leave instructions for the property to transfer to one beneficiary. Others may decide to leave instructions to sell the property during the estate administration process. The market for second homes typically remains consistently strong even when the primary market fluctuates.
If the goal is to keep the property in the family because there are many memories attached to the property, then there are a few solutions available. Transferring the property to a trust can prevent the conflict that might arise in a direct inheritance scenario with multiple co-owners.
Testators may also want to consider leaving instructions for the property’s sale but extending the right of first refusal to specific beneficiaries. The right of first refusal gives a beneficiary or family member the option of purchasing the property before the personal representative of the estate lists it for sale on the open real estate market.
Factors including family dynamics and the overall value of an estate may influence which approach is best. Testators may need to consider the likelihood of conflict, the possibility of estate taxes and the potential credits when handling high-value assets during estate planning. Identifying resources that have emotional and financial significance can help people establish estate plans that work for them and their families.