How Can I Keep Our Summer Home in the Family?

If like many of our clients, you and your family have enjoyed countless days at a beloved vacation retreat, you may be wondering how to keep that property in the family for generations to come. How you plan to transfer your vacation home will make all the difference in whether your children are able to retain and enjoy it or are forced to sell. One instrument our estate planning attorneys recommend for transferring such property is a qualified personal residence trust, or QPRT.

The primary benefit of the QPRT is to allow you to remove the property from your estate, so instead of paying estate tax, you only pay the lower gift tax rate. When you establish the trust, you make a gift of the property to your heirs, but retain the use of it for a set period of years. Since your heirs won’t be able to take full ownership of the property for years, your gift to them is discounted at a fraction of the property’s market value. This allows you to leverage your lifetime exemption from gift taxes to greatly reduce the costs. Moreover, you have removed your property from the estate, so the total value of your assets may drop below the minimum for federal estate taxes, securing additional wealth for your heirs.

If you are unconcerned about the federal estate tax, there are other instruments you can use to hold the property for the use of your heirs. Many families encounter problems when parents award joint ownership to several of their children, and it turns out that one or two are not interested in maintaining the property. Often, the children who want to keep the vacation home cannot afford to buy out their uninterested siblings, who can force a sale to get full value. To prevent this scenario from playing out, you can create an PLLC that owns the property and distribute certificates of beneficial interest to your children. The bylaws of the PLLC can prohibit a sale of the property unless all parties agree.

At Tyrell Law, PLLC, our attorneys stress the importance of crafting an estate plan to fit your specific needs. If you’re concerned about keeping a beloved vacation property in the family, we can help you structure your assets to make that happen. To schedule an appointment, call us at 702-382-2210 or contact our Las Vegas office online.