Succession Planning for Vacation Property
Steps for Cottage Sharing
With summer here, many families will be enjoying their family cottages during the span of summer’s endless sunshine defining the lazy days of summer at the family cottage.

This is how summers have always been. You enjoy the laughter of denials and finger-pointing about who created the latest mysterious heap of sandy wet towels on the cottage porch floor. The children stand shivering from their latest dip in the lake and you silently wager bets against how long it will take for the lake water drops hanging from ends of clumped wet bangs to land on the table.

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If your family cottage property is adjacent to a lake with public roads, this information may be useful to aid you in determining the legal rights the public has to access the surface of the water next to your family cottage.

Water access points along Michigan’s inland lakes
As families begin contemplating vacations up north or weekend getaways to one of Michigan’s many inland lakes, water access points deserve careful consideration as they have become sources of lawsuits regarding the public’s right to access the surface of the water from public roads adjacent to the water. Many of these lakes are bordered by subdivisions that were platted decades ago and depending on the language in the plat and the type of public roads, whether perpendicular or lateral to the lake, will determine whether the surface of the water can be accessed by the public by means of the platted streets.

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Most people would think “economic value” is the most important factor to protect the family cottage. Common “emotional value” has proven time and time again as the most important motivation behind developing a cottage succession plan to protect the family cottage.

Yes, it’s true when they say, “beauty is in the eye of the beholder,” and it’s especially true when thinking of the family cottage. Whether the family cottage is a family retreat in some stunning mountain region, or a luxurious custom built retirement home on one of the Great Lakes touching Michigan, Illinois, Wisconsin, New York, Ohio, Indiana or even Canada, or a small rustic cabin on a pristine lake or stream, it’s not “economic value” that is the most important factor to protect the family cottage, it’s the “emotional value.”

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The Practical Effect of Michigan Supreme Court’s Decision in the case of Klooster v City of Charlevoix

The Supreme Court’s decision in the Klooster case provides that certain types of joint ownership of real estate in Michigan can prevent property taxes increasing at the time of a joint owner’s death. While the decision is generally favorable to the taxpayer, there are various rules and contingencies that must be satisfied in order to achieve property tax savings.

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Budget Proposal Includes Anticipated Proposals to Change Both Tax and Spending Policies

Michigan Governor Rick Snyder called the consideration of his proposed Executive Budget a “defining moment” for the state this week as the Executive Budget was submitted to state legislators for the 2011-2012 fiscal year. Snyder commented on his budget as an opportunity to “stop living in the past and start looking to the future.”

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Our summertime friends helped us celebrate Casey.

Conor and The Rose Lizard Club sign

Casey named this club the “Rose Lizards.” We made special friends at the family cottage. These friends are people you don’t see on a daily basis and sometimes they may be just summertime friends. I love these friendships, because you pick up where you left off and never skip a beat in conversation or in sharing a story or two.

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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.

The labs enjoying air conditioning tire from sunning outside and decide to siesta in the family room. Jake, our chocolate lab, probably dreaming about the lake vacation romp at the family cottage, promptly starts snoring. Ahh – the life of a dog. Our backyard has a pond with four fish. The water rushes over rocks giving that soothing sound. The scenery changes at home. There is no big lake or cottage to sit by, but there is peace in the backyard with the birds chirping and butterflies flying on the bushes. Returning from a cottage always amazes me at how much you miss the beauty of the water.

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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.

My teens are happier. We always have a friend in tow. Our eldest, now 18, has college in the fall, but with a summer job and other activities, his summer has changed. The twins, now fifteen, are not working yet and can enjoy the summers of yesterday romping on the beach, biking, and staying up way past midnight. Adventure is always looming for our family at the cottage. New friendships, new experiences filled with laughter, and the stress of the daily grind seems to disappear. These experiences make owning a family cottage absolutely the best moments in life.

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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).

The key term in all of this is “transfer of ownership,” which basically means a conveyance of title to, or a present interest in, real property. However, not all conveyances constitute a transfer of ownership. One such exclusion is for a transfer of ownership between two or more persons that creates or terminates a joint tenancy if
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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?