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Originally Posted by Flylady
What I have done to ensure the place stays in the family after I am gone is I have appointed a trustee to pay for taxes, insurance and certain type of up keep for 15 years after I am gone.
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This is an honorable and well-intentioned goal, but if you're open to a little friendly advice...you may want to reconsider. We, as a family, had this discussion ahead of time (prior to the previous generation becoming very elderly or gone), and after a great deal of thought, discussions, and opionions from legal and financial experts, opted not to do it. (A somewhat heartbreaking, but "it's for the best" decision.) It of course varies with each particular situation, and I'm sure there are examples of it working, but I think it's a perilous road.
For the sake of discussion, let's say:
~ Mom and Dad have owned a decent place on the Lake for 50 years.
~ Because of the skyrocketing values, the place is now worth $1 miilion
~ They lived comfortably, not wealthily, and all other assets totalled $300k
~ They also left a trust to cover the cost of the place when they are gone.
~ Their grown children (Huey, Duey, and Luey), each deserve an equal share of their life savings.
A few possible scenarios to consider:
- Huey never really got his life in full swing, and hasn't ever owned a home. By being a 1/3 owner, he is entitled to all rights of ownership, so he moves in permanently. But Duey and Luey live hours away, and own their own homes. So they consider it a weekend/vacation place, and only get up there for those times. Is it someone's permanent home, or a vacation place?
- Although Duey loves the Lake, he really enjoys Maine better. He'd prefer, no disprespect intended, to buy a place there, but Huey and Louie only inherited $100k in cash, so they can't afford to buy him out of his 1/3.
- Luey's job forces him to move to the west coast, so he'll never (hardly) get to enjoy the place. Why would he want to own 1/3 of it?
- Duey hits a rough patch in life. He loses his job, and his son needs expensive medical care. On paper, he's worth $333,333, but he can't get at it to pay the bills.
- Luey can afford to send his quadruplet daughters to a decent college, but with his share ($333,333) of the house's worth, he could send them to a great school. Being a terrific father, that is his preference - he'd rather forego vacations/weekends on the lake to be able to do that for his daughters.
And there are numerous other issues like liability, general family issues of not getting along, etc etc.
Don't get me wrong, in a perfect world, it'd be fantastic to be able to hold onto the family place for generation after generation. It's just less and less feasible to do so, in my opinion.