Feeling nostalgic about summer vacations? Me, too.
One of the most tangible forms of inheritance is a vacation home. Parents often express the wish that their children not sell the cabin in the woods. This is particularly so when it has been the scene of cherished family memories. Whether in the mountains, at the beach, by a lake or in the woods, such memories sustain us during the more ordinary or trying times. But those memories, which still exist for the next generation, can quickly become overshadowed by the complications of owning and sharing a home with siblings and their families. Anger and frustration can replace more bucolic feelings.
Such controversies could be avoided by putting the cabin in an LLC. What if, for example, one sibling cannot keep up with his or her share of common expenses? If the property is in an LLC, it would be a simple step for the LLC manager to rent the cabin for a part of the year, generating income to cover those expenses.
Jayne Sykora of Epilawg has written of the benefits and basic requirements of what she calls a “cabin LLC.”
[A]n LLC can be created to own and manage a family cabin. The LLC and its owners (the LLC members) can create a Member Control Agreement for the LLC that clearly sets out the rules and responsibilities for managing the LLC and the cabin property over time. The main issues to consider with a cabin LLC are 1) management, 2) transfers of interest & valuation, 3) use of the cabin and 4) costs associated with the LLC.
See the entire article at Epilawg.
Oh, and setting up a family LLC is a great way to make annual gifting easier, but that is a topic for another day.
Meanwhile, let’s starting planning for the Christmas holiday!