Traverse The Magazine had a great article on their website about cottage ownership. I have many clients who have taken this step and I believe it to be a prudent one. If you love northern Michigan and don't subscribe to this magazine, you should consider it - they do a great job.
Ten Reasons Why a Cottage LLC Makes Sense
Good succession planning when organizing your estate can make all the difference when passing your cottage, cabin or family home onto the next generation. Here are ten reasons to consider a Cottage LLC.
Sometimes the one place in the world that seemed to bring your family together—the cottage, cabin or cherished family home—is the very thing that rips the family apart. Different expectations for what to do with the real estate, different feelings about cashing out versus preserving that special place can be so strongly felt they actually destroy even strong relationships.
Stuart Hollander has written Saving the Family (and the) Cottage, a guide to help you plan your estate in a way that includes a succession plan to preserve your special place and your the family.
Here he shares the ten reasons you should consider a limited liability corporation for your cottage, cabin or family home.
1. Prevents an owner from forcing the sale of the cottage through an action for partition.
2. Is an alternative to allowing common law rules to dictate how the cottage operates.
3. Prevents transfer of an interest in the cottage outside the family. (This includes preventing an in-law from acquiring an ownership interest in the cottage.)
4. Helps protect the owners from creditor claims.
5. Establishes a framework for scheduling use of the cottage.
6. Provides sanctions for nonpayment of cottage expenses.
7. Can serve as a vehicle for an “endowment” (money set aside to fund cottage expenses).
8. Can require mediation or arbitration of family disputes.
9. Allocates control of the cottage between or among generations of owners.
10. Can help delay (but not avoid) the uncapping of Michigan property taxes.
My being a Realtor specializing in waterfront properties, the ten points should be discussed by every family. I have seen many unfortunate situations that would have been alleviated had some basic planning been done.
billy
