Page 80 - LIN November 2022 Issue

AMANDA DORIO, Esquire

ESTATE PLANNING and

YOUR VACATION PROPERTY

acation homes are the playground on which many wonder-
ful memories are created, but a vacation home is also real
Vestate that must be planned for, managed, and maintained.
Therefore, some important estate planning questions need to be con-
sidered when owning a vacation home.
WHAT HAPPENS TO YOUR VACATION PROPERTY
UPON YOUR DEATH?
This largely depends on how it is currently owned. If you are the sole
owner or if you own the home as a tenant in common with one or
more people, you need to decide what will happen to your interest in
the property. Suppose you own the property with another person as
joint tenants with rights of survivorship or with a spouse as tenants by
the entirety. In that case, your interest will automatically transfer to
the remaining owner without court involvement. If a trust or limited you wish your beneficiary to keep the property, you need to consider
liability company owns your vacation property, the entity will con- whether they can meet the financial obligations; if not, they may end
tinue to own the property after your death. up prematurely selling it.
WHAT DO YOU WANT TO HAPPEN TO THE PROPERTY IF MORE THAN ONE PERSON WILL HAVE AN INTEREST
UPON YOUR DEATH? IN THE PROPERTY, DO THEY ALL GET ALONG?
Being proactive by creating an estate plan allows you to control what All your children may get along now, but will they still be able to come
happens to your property. If you do not create a plan for your property together and see eye to eye when you are no longer living? Owning
(and if it is not owned in joint tenancy with right of survivorship or property together means that they need to be able to communicate,
tenancy by the entirety), you will be putting your loved ones through agree, and equally contribute to the property’s maintenance. A proper
the probate process. estate plan can address these potential issues by outlining everyone’s
responsibilities with respect to the property, everyone’s rights to the
WHAT ARE MY OPTIONS FOR HANDLING YOUR property, who makes the decisions, what to do if a dispute arises, and
VACATION PROPERTY? how someone can walk away from the property.
You may:
• Give the property outright to a loved one. WHAT SHOULD YOU DO TO MAKE YOUR INTENTIONS
• Leave the property outright to a group of people. A REALITY?
• Prior to your death, transfer the property to your You need to legally document your intentions to ensure that your loved
revocable living trust. ones know what your wishes are, that they will be followed, and that all
• Prior to your death, transfer the property to a special trust possible scenarios have been planned for. If you have concerns about
your beneficiaries being able to financially maintain the property, you
that owns only the property. need to meet with a financial advisor to design a plan that allows you
• Prior to your death, transfer the property to a limited to set aside money for its maintenance. Also, you need to meet with
liability company. an insurance agent to make sure that the property is properly insured
• Instruct your trusted decision maker who will wind up based on its intended use and to acquire additional life insurance in
your affairs to sell the property. case you need another source of financial liquidity for its maintenance.
You should also meet with your tax adviser to make sure that you know
CAN YOUR BENEFICIARY AFFORD THE of any potential tax consequences of transferring the vacation prop-
VACATION PROPERTY? erty, whether during your lifetime or at your death.
While there may be wonderful memories associated with your vacation
home, you know there are also many responsibilities. When you decide If you are interested in learning more about your options for
to leave your property outright to a person or group of people, they protecting your vacation property and having your wishes
will become responsible for financial obligations such as mortgage for it carried out, please contact us. You may email me at
payments (if any), utility bills, and property insurance and taxes. If amanda.dorio@henlaw.com or by phone at 239-344-1362.

80 Life in Naples November 2022