What arrangements can govern a vacation home inherited by siblings?
Key takeaway
Siblings who inherit a vacation home can govern its use and costs through a family agreement or an LLC agreement. A family agreement can set use rights, assign responsibility for maintenance and property taxes, and provide a buyout option. An LLC agreement can govern usage and funding costs for repairs. These arrangements address practical questions that can arise when siblings share ownership.
A family agreement can set use and cost rules
A family agreement can assign responsibility for maintenance and property taxes and set rights to use the home. Practitioners describe agreements that provide a buyout option, with a price below third-party sale value and payments over several years.
Disagreements among siblings can involve vacation-home use, maintenance costs, or whether to sell after their parents die. These concerns involve shared access and the costs of keeping the property.
An LLC agreement can govern operation
An LLC agreement can govern how siblings use the home and fund repair costs. Practitioners describe agreements covering usage and the funding of repairs.
Governance can address shared decisions
Family governance describes a system for making decisions together about wealth and enterprises.
Estate planning practitioners describe governance procedures that could include family values, a vision, a mission, a strategic plan, and a succession plan. Those procedures could also include a family council, written policies, clear roles and responsibilities, board assessment, outside directors, and conflict of interest and ethics policies.
Family capacity can shape responsibilities
Estate planning can account for family relationships, stress responses, and financial habits. Practitioners also identify relatives' ability to manage added responsibilities during incapacity or after death as a planning consideration.