Few states boast more vacation homes than Florida. With its white sands and alluring temperatures, Florida is a fantastic place to retire. What happens, though, when an individual’s estate value is questioned or even altered because of vacation home holdings? Proper treatment of second homes in an estate plan can lessen the number of problems experienced by relatives and beneficiaries after a benefactor dies.
People who are nearing retirement age should begin to think about how they will hand down their vacation homes to the next generation. This is particularly true for individuals who have multiple children who may enjoy joint ownership of the property.
Before making any plans, determine whether the family even wants to retain possession of the home after the owner passes away. Sometimes, these homes can be a financial burden for the recipients. That charming cabin in the woods might need so many fixes and upgrades that it quickly becomes a money pit.
There are a variety of estate tools that can be used to transfer property. Consider handing down the vacation homes through irrevocable trusts or limited liability companies, both of which can allow a benefactor to grant shares of a property. If you want to divide access to the vacation home among multiple parties, one of those could be the best option. Be sure to appoint one heir as manager. That person will be tasked with paying bills and insurance, and can also serve as a de facto landlord.
Instead of using the vacation home themselves, these relatives could rent it out. Still others might want to reserve the property for personal use. Property owners should create a master plan for dealing with the property, including how it will be used, and property transfer options. Even if the home is entirely paid off, there will still be maintenance, upkeep and tax costs to consider. Those expenses should be included in an estate plan.
Transferring property, especially second homes, can be confusing if you have a simple will. Instead, benefactors should consider discussing other options, such as trusts, with qualified probate attorneys who can provide additional information.
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