What are the estate planning options for our family cabin?
Minnesota estate planning attorney Karen Schlotthauer discusses how heirs can control the family cabin through tenancy in common, LLC, or trust.
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You have three kids, and they all want to own the cabin after your death. If you have three children and everyone’s on board and wants to own a cabin, for example, after your death and everyone’s financially stable, one option for planning would be to simply leave the cabin outright, free of trust to the three kids. That lets them enter into the appropriate agreement that they want to participate in. They could form an LLC, Limited Liability Company. They could enter into a tenancy and common agreement. The benefit there is that they’re in control and it’s not dictated to them how they should own it moving forward. If, on the other hand, one child has financial means and the other two don’t, but everybody gets along and they all want to continue to own it, then we’ll probably look at owning that cabin in a trust. The thing you have to make sure is that there’s money there to pay taxes, insurance. Who pays for the new roof, utilities?
Generally speaking, a parent might fund that trust with other money either through a life insurance death benefit or other assets so that they’re guaranteed that that trust will stay in existence for the term that the children find appropriate.