A vacation home is a great place for a family to spend time together, and many Washington residents would like to make that kind of experience something to pass on through the generations. Unfortunately, vacation homes are often a source of conflict after one generation leaves it to the next. Multiple siblings and their spouses and children all want their time in the property, and they may get into conflict over who gets it, when they get it, who maintains it and who pays for upkeep. The original owner can leave the home in a will and pass it on to the next generation, but that doesn't settle most of these questions.
One way to keep a home in the family and avoid some of these problems is by setting up a trust. A trust is a way of dividing ownership in a property between a trustee and beneficiaries. The trustee has the task of preserving the financial health of the trust for the benefit of the beneficiaries.
The terms of the trust can spell out how the beneficiaries are meant to share the property and make some provisions about how they are to pay for insurance, taxes, maintenance and other costs. It can also provide some solutions for what to do when one of the beneficiaries needs to sell his or her share of the property - a common source of conflict in cases involving co-owners of real estate.
Trusts can be set up as revocable or irrevocable, during one's life or effective upon death. Each type of trust has its advantages and disadvantages. Because of that, trusts are not foolproof and setting one up should not be taken lightly.
However, when executed well, trusts can be very useful tools for preserving assets for a long period of time. That quality can make them especially useful for preserving a piece of real estate, and it can make them a good way for Washington families to preserve a family vacation home into the next generation.
Source: MarketWatch, "How to hand down family vacation homes," Amy Hoak, Sept. 11, 2013