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Archive for the ‘Cottage Real Estate Laws’ Category

Did you know that just watching and listening to a water sprinkler on your lawn provides solace and serenity. Our chocolate Labradors back from their vacation at the lake and family cottage seem eager to chase squirrels and lay in the sun on the moist grass in their own yard. What a beautiful day in July. We finally got a break from the humidity for a few days.

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Drinking a cup of joe, on a beautiful 4th of July weekend, I experienced solace as I watched swans swimming and boats heading out of the marina in Suttons Bay, Michigan. The sun was beautiful on the water. The boats were heading out for adventure at the National Cherry Festival in Traverse City, Michigan. What a different world from our other home in Farmington, Michigan. The air is crystal clear. Ahh – the joys of summer – relaxation and peace.

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The Michigan General Property Tax Act (the Act) requires real property in Michigan be assessed yearly and taxed at one-half (1/2) of its true cash value (true cash value is the same as market value). However, with the passage of the Headlee Amendment to the Michigan Constitution in 1994, limitations were placed on how much assessments and taxes could go up each year. Since 1994-1995, annual property tax increases have been “capped” at levels specified in the Act and remain capped until a “transfer of ownership” occurs. Once a transfer of ownership occurs, the property is reassessed at one-half (1/2) of the “true cash value” as of that date and the taxes, in most cases, go up substantially. The property tax is capped at the new, higher amount until the next transfer of ownership takes place (Michigan property tax bills show a “Taxable Value” and a “State Equalized Value.” The Taxable Value is the capped value upon which the property tax is assessed. The State Equalized Value approximates one-half (1/2) of the true cash value/market value of the property. Once the property tax is uncapped, the State Equalized Value and the Taxable Value become the same for the year in which the uncapping occurred and the cap goes back into effect at that amount).

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Why should your cottage be in jeopardy and need saving? Cottage-Law.com expert Dan A. Penning has invaluable strategies to pro-actively plan how to protect your cottage first and secure its future. Why risk an emergency rescue plan when you can plan to avoid the crisis with a cottage succession plan?

The Right Legal Entity for Your Cottage

Circumstances need to be evaluated for each family and cottage property. There are a few special cases where keeping your cottage under direct real estate ownership is the simple solution to a complex situation. Two cottage planning solutions which should be examined, and discussed with your cottage law attorney, are Life Estates and the Ownership Agreement.

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How We Hold Title to Real Estate Ownership

There are two ways to hold title to real estate:

• directly, or
• indirectly

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First Steps Cottage Succession Planning

First, ask your child, or children, if they want a share of the cottage. They may not want a share of the family cottage and there could be a variety of reasons. Each should be explored for passing on to them an alternative value of their share of the family cottage.

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Every kid should roast a marshmallow by a fire next to the lake, paddle a canoe, catch a fish, dive off a raft, skip stones and and eat an ice cream cone or a freshly made donut from a local food shack which opens every summer for cottage visitors.

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