Vacation homes are often places where happy family memories
are made. Unfortunately, they can also be the source of headaches and disputes
when heirs disagree about how to manage them.
So, as many second homeowners are closing up their family
retreats for the season, it might be a good idea for those at or nearing
retirement age to think about how they might pass the asset down to the next
generation — especially when multiple children and their spouses will be
entering into joint ownership.
Create a Master Plan: Before anything else, have honest
conversations about whether there’s an interest in keeping the home. After
crunching the numbers, it might not be desirable or feasible. Even if there is
no mortgage, there are taxes and maintenance costs. Plus, there’s the cost of
traveling to and from the home to use it.
If everyone is still game, create a master plan for the
home, detailing its long-term future and how it will be handed down. For
example, decide if the home is to be a place of solitude or used for frequent
entertaining. Discuss any plans to develop the property further.
Also, it might be a good idea to discuss the idea of renting
out the home when it’s not in use. A recent report from HomeAway, an online
marketplace for vacation rentals, found that vacation rental owners were able
to make, on average, $1,778 for a weekly rental over this summer. If all this
planning feels like you’re treating the home like a business, you’re on the
right track. This mission statement should be formal and set some structure for
how the home will be used.
When there are multiple people who will gain ownership of
the property, it’s also best to appoint someone as manager. That person will
pay the insurance premiums, utility bills or repair the roof in the case of an
emergency, she said. Sometimes the role of manager is rotated every couple of
years, and it often comes with a reward of an extra time slot at the vacation
home or a longer or a more desirable slot.
House Rules: By establishing house rules, everyone is clear
about how time slots to use the vacation home are chosen, and how they need to
leave the home once they’re done. Some families create a checklist to ensure
towels are washed, folded and put away; the dishwasher is empty; and
perishables are removed from the refrigerator. Failure to follow the rules can
bring consequences, such as having your next use period shortened by a day or
having the last pick of time slot next season. Or, if a professional cleaner
has to come to tidy up after you, you might have to pick up the bill.
It’s also important to create rules on how someone can get
rid of their share of the home — especially if they don’t have the means to pay
expenses.
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