As per the National Association of Home Builders, there were around 7.5 million second houses in 2018, accounting for 5.5 percent of all residences. These homes are not merely pieces of property investment that must be planned for, administered, and maintained; they are also the site of joyful memories for you and your family. If you are planning to invest in a holiday home, you must also consider its implications on your estate plan. You must speak with a trust and estates attorney near me before making such investments.
Here are some things to consider before buying your vacation home.
What Happens to Your Property When You Die?
The destiny of your vacation home after your death is primarily determined by how it is presently held. If you are the single owner of the property or if you possess it as a renter in partnership with others, you must determine what will become to your ownership stake. If you hold the estate as joint owner with rights of succession or as renters by the entirety with another person, your interest will immediately transfer to the surviving owner without the need for a court order.
If you hold your vacation property through a trust or a limited liability corporation, the organization will remain to possess it after your demise. Additional directions concerning what will happen after your death may be included in the trust document or operating contract.
What Do You Want to Happen to Your Property When You Die?
The great thing about strategically drafting an estate plan with estate attorney is that you can direct what transpires to your wealth and assets in a legally enforceable way. It is crucial to know that if you do not start planning for your property, your state will make the decision for you based on its regulations and by subjecting your family members through the probate procedure. Probate is a procedure that settles your accounts and transfers your money and property to the rightful owners.
It is also crucial to understand that if you own estate in an other state than where you live, your loved ones may have to initiate two probates. There are various alternatives for managing your vacation home.
Give the estate to a beloved one entirely. This person might be someone who has showed an interest in continuing to utilize the property, or someone who has the financial resources to preserve it.
Give the estate to a set of people outright. Because your entire family likes visiting at the vacation home today, you may intend for them to continue visiting there after you pass away.
Create an ownership contract and assign the estate to a group of persons as joint tenants. An ownership agreement might outline each party’s rights and duties when there are several parties concerned, each with their own property stake and personal financial condition.
Is the vacation property affordable for your beneficiary?
While you may have many good memories linked with your holiday home, you are also aware that there are many obligations. When you transfer your property to an individual or group of individuals entirely, they will be accountable for monetary responsibilities such as mortgage interest (if any), energy bills, and estate taxes and insurance. If you want your recipient to maintain the property, you must examine if they can satisfy the financial commitments; otherwise, they may wind up disposing it hastily.