The treasured memories built within the walls of your vacation home are priceless and preserve the essence of your family and life. While you may only visit the property on special occasions, holidays, and weekends, ensuring the home stays in the family is vital in upholding long-lasting traditions.
Estate planning is a critical tool for safeguarding your property and appointing those to handle, manage, and own your possessions after you pass away. There are various ways to include your vacation home in your estate plan. However, they all offer various benefits and requirements. It is important to consider your options and speak with your attorney for the best decision.
Adding Your Vacation Home to Your Estate Plan
Every vacation home is unique and requires a thorough understanding and evaluation to receive the best possible protection for your family and the property. While it is best to speak with an experienced attorney about your situation, consider the following options you may use to add your vacation home to your estate plan:
Gift the Property
Many individuals’ first thought when passing down a vacation home is to give the property to a loved one as a gift. However, if the value of the property exceeds the annual gift tax exclusion, the giver will be required to file a gift tax return with the Internal Revenue Service and the amount over the annual exclusion will be added to the giver’s lifetime gift tax exclusion.
Establish a Life Estate
When an individual—a life tenant—creates a life estate, they share ownership of the property with another person, also known as a remainderman. While the life tenant owns and may use the property for the duration of their life, the remainderman will automatically receive the property’s title upon the life tenant’s death. By using this method, you can pass your vacation home onto your family while avoiding a probate proceeding in the Surrogate’s Court.
Utilize a Limited Liability Company (LLC)
When a family uses a limited liability company (LLC), they allow their heirs to become shareholders who can benefit from the assets held by the LLC while the creators still maintain control over the property. Through an LLC, you may be able to reduce the taxable estate and add provisions to prevent someone from obtaining the home.
Place Property Into a Trust
Trusts are incredible ways to protect your assets while also avoiding probate and certain taxes. Transferring your vacation home into a trust will ensure the property does not trigger probate while also allowing you to leave the property to non-family members or individuals of your choosing. If you have a specific individual in mind to receive the property, a trust will assist you in the process.
Before you make a decision and move forward with a specific process, speak with a lawyer about the best possible options for adding your vacation home to your estate plan.
Learn More About Estate Planning With Attorney Cheryl L. Fratello
There are numerous factors to consider when choosing the best option for adding your vacation home to your estate plan. Without an experienced attorney, you may not catch significant legal issues in your plan, resulting in the loss of your property.
Our Fratello Law estate planning attorneys understand the importance of keeping property with those you trust. We have over 120 years of combined experience protecting assets and guiding New York residents through their estate planning needs. At Fratello Law, our small firm has a big heart, and we want to welcome you into our family. Schedule a no-cost consultation by calling (631) 406-5580 or completing our contact form today.