Proper estate planning can go a long way in ensuring a smooth transition of finances and property to the next generation. Without this advance planning, the situation can become muddled, frustrating, and downright expensive for your heirs. Luckily, there are a few steps you can take now to ensure the most successful passing on of your legacy log home.
Marilyn McWilliams, partner with Denver law firm Moye White, says she’s helped a large number of clients prepare for the future through estate planning. Many of those arrangements include the passing of valuable vacation properties to the next generation—a process that’s made much simpler through advance planning.
When working with homeowners, McWilliams says one of the biggest issues that surfaces upon their passing is the “multi-state ownership” challenge. In other words, an individual who owns real estate in multiple states, and who doesn’t prepare in advance for the ownership transfer upon his or her death, may unwittingly be pushing that estate into probate across multiple states.
“If the properties are all in the deceased’s name, and located in various states, then the heirs have to deal with multiple probate proceedings,” McWilliams explains. “This can be a big nuisance because state laws differ. In some areas it’s not very complicated, but in others it can be extremely complex and expensive.”
One way to avoid this red tape is to place the log home ownership in a trust, Limited Liability Company (LLC), family partnership, or corporation. “By taking this simple step, you can avoid the whole issue of multistate probate and legal proceedings,” says McWilliams. “In fact, this is a planning estate administration that’s easily handled through a corporation, trust, or partnership.”
In cases where the log home is being used by the homeowner and/or family, McWilliams advises the creation of a trust that will in turn hold the deed to the home. This step can be taken as soon as the land is purchased, or at a later date. The process itself is straightforward, she says, and requires the help of an attorney and/or title company to handle the paperwork. It’s most easily tackled when the primary homeowner is alive, and “is much more complicated to get done after the person passes on,” says McWilliams.
Family issues can also come into play when it comes time to divvy up estates among children and/or heirs. While mom and dad may have enjoyed their lovely log cabin home in the woods for decades, their children may not necessarily be as enthralled by its beauty and allure. Some of the heirs may want to sell the property, says McWilliams, while others may want to retain it for future generations.
“The use of the log home can be a contentious issue,” says McWilliams, “particularly when no one can agree on whether to use it or sell it.” Homeowners can help assuage the situation by taking early steps to avoid the quarreling or contentiousness upon their death.
By establishing a trust and a fund for maintaining the log home (to cover property taxes, utilities, insurance, etc.), for example, parents can take the financial pressure off of their heirs and ensure that the property remains in tip-top shape. Another option is to draw up a family agreement that will dictate how the property disposal or ownership is handled in the event of the owner’s death.
McWilliams says log home owners should also consider just how long they want to possess their properties. “Some go into it thinking that they’re going to own the home forever, and that it will be a family retreat that lasts for generation after generation,” says McWilliams. “In reality, there will be a time when you no longer want to go there, or someone down the line wants to sell it. Plan ahead for these situations and you’ll be better prepared for the future.”