Dogs are our link to paradise. They don’t know evil or jealousy or discontent. To sit with a dog on a hillside on a glorious afternoon is to be back in Eden, where doing nothing was not boring – it was peace.
– Milan Kundera

Jake and Ginger, our chocolate labs, have returned from their adventures at the lake. This is a time to reflect, if only they could describe the wonderments of the water and nature at its best.

The greatest pleasure of a dog is that you make a fool of yourself with him and not only will he not scold you, but he will make a fool of himself too.
– Samuel Butler; Notebooks, 1912

Take time to visit a family cottage or lake this summer. If you don’t own a dog, take pleasure in watching the contentment and happiness of a dog swimming in the lake. It will sooth the soul.

-Dori Penning

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.

In talking with my friend Cheryl, we stared profoundly at a graceful family of swans trying to figure out how they nest; and also about their eating habits when they go “bottoms up” and somehow manage to get their food while upside down. We decided they were after seaweed, how boring, but the mother swan just kept teaching her babies how to get food, never leaving their side. The questions we kept asking each other of how swans nest and about their daily existence seemed a perfect and peaceful topic while we looked out on the water. I told Cheryl to Google it. It seemed natural on that beautiful summer day that our minds were both churning about the life of a family of swans. So with summer at the cottage, you find moments of opportunities and questions seem to come easily about the profound simplicities of life.

I’m sure you each have your own cottage stories and memories. When you can leave legacies for family members, it can enrich your life. I always remember that footprints on the sand can be followed. But, maybe you want to make your own footprints – a new direction to share with your family.

Connecting with Dan Penning, who is experienced in cottage law and real estate cottage succession planning, can keep your cottage memories intact with family members and for future generations. Now with July upon us, remember your blessings at the family cottage and share a hug or two with new friends and also share a moment of solace as you look at the water and catch your own footprints at the beach.

-Dori Penning

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.

Dan Penning examines each aspect of your estate and cottage property including strategies to employ to avoid uncapping cottage property taxes. The advantage you gain using a cottage law expert is knowing you will have created a flexible legal entity to fulfill your hopes and dreams of protecting, preserving and saving your family cottage for use by all future generations.

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.

The best way to protect your family cottage is to move it away from the hazards of “direct ownership” being governed by real estate laws. We recommend moving the family cottage from direct ownership to “indirect ownership” and for a Limited Liability Company which is governed by Entity Laws rather than Real Estate Laws.

When you form a Limited Liability Company (LLC) for your family cottage you create a company which has owners, and they are often referred to as “members of the company”.

The “Operating Agreement is the core strength of a successful Cottage Succession Plan. It is designed to control the use and enjoyment for all of the family cottage. The Operating Agreement provides a structure of rules to manage the operation and future of the cottage and includes the rights and obligations for each “member of your cottage LLC”. There are similarities with each operating agreement, but like the diversity of families, each plan is unique to that family’s requirements.

The Voting Power of Membership Units

It is natural when you think of a “company” to think in terms of owning a “share” in the company. Even though it’s not required, some families issue “Membership Certificates” to the new members of the Cottage LLC. Having a solid certificate in hand clarifies the identify of the owner and how many “units” in the company are held by that owner. An LLC is the perfect legal entity to incorporate the principles of democracy – each member gets a vote on everything so “Units” are important when members are voting on cottage operating and shared use concerns.

Because a cottage succession plan is designed for future generations, when determining the number of “units” or shares in the cottage LLC, it is best to choose many versus fewer to avoid having to create “fractional” units.

When Will Your Cottage Plan Become Effective? Now or Later?

Part of the initial cottage succession planning will be deciding which type of Limited Liability Company (LLC) to form. This involves timing – when do you want the LLC to become effective. Now or Later?

• An “Immediate LLC” takes effect “immediately” when you finalize your operating agreement, file articles of organization, and sign the deed.
• A “Springing LLC” takes effect when the cottage owner dies and is set up through an estate plan.

Where Will You Form Your LLC?

You can establish and organize your LLC within any state, but most set the company up within the state where they have their permanent residence or within the state where the cottage is located.

Each state has similar Limited Liability Company Laws, but they are not identical. In some states LLC managers have complete control, whereas in other states more power is granted to members of the LLC.

Name Your Cottage Limited Liability Company

The name you choose for your LLC has to be unique. States will not accept nor register two LLCs with the same name. If you have decided on a name for your family cottage, and are establishing an “Immediate Cottage LLC” have your cottage law attorney reserve that name with the state where you are organizing your company. This will prevent another person from registering the name you have chosen for your LLC while you are finalizing your operating agreement.

Unfortunately you are not able to reserve a company name for a “Springing Cottage LLC” due to the time span between the drafting of an operating agreement and the owner’s death.