Cottage Property Risks
There is a lot to consider when planning the family cottages future survival.
Yes, you could draw up a simple will and leave the family cottage equally to your children, but surprises could put the family cottage at risk.
You've spent a lifetime of summers at the cottage. Family memories live there and it's the only place where laughter replaces phones, the sun is your clock, and keeping sand out of your shoes is the challenge of the day. Each summer is a chance to create family memories of good times all over again.
It's easy to believe this is how you, your children, and your grandchildren will always spend your summers, at the family cottage.
But the reality of real estate laws and rhythms of life and death could alter your dreams and goals of harmonious sharing of the family cottage by future generations.
Life Surprises
If there are no specific, and enforceable, instructions about how the cottage co-ownership should be managed you potentially place your valuable family legacy asset in harm's way.
How your emotions and sentiments are woven into the family cottage may not match how your children, and their spouses, view the family cottage.
A child might not want any part of the cottage because they can't afford it, they live in another state and aren't able to use it, or they simply want to "cash out their inheritance" for its cash value, or worse yet, your child might lose their portion of the cottage during a divorce. All are messy situations without equitable solutions for all your children without a plan.
Forced Sale of the Family Cottage
If you leave your cottage equally to your children in the standard way as “tenants in common”, which is the traditional form of real estate ownership, any “tenant in common”(your children become co-owners) could force the sale of the cottage. This is called a right to partition.
The principle behind The Right to Partition is based upon English common law that no person can be required to own property. If there is a legal conflict between your children, or the co-owners of the cottage property, a court will order the sale of the cottage property if it cannot be divided in a fair way - easy to do for land, but how do you equally divide a building or a boat or a wooden dock? You can't. The cottage property will be sold and the proceeds from the sale will be equally divided between the co-owners.
Planning to Protect and Save the Family Cottage Memories
Based on our expertise, we analyze the best type of plan to meet your needs based on various factors including every family’s specific circumstances and goals. We will develop, as part of your plan, the best entity, like a limited liability company or a cottage trust within which to structure and incorporate the terms of your plan.
Send me a message or give me a call to discuss your family’s options.
Contact us.
Dan Penning
dan@penninggroup.com
(248) 752-6480
P.O Box 490
Suttons Bay, MI 49682