Lessons From Lee: Planning for the Future of a Family Home

Many families own a home that has been a gathering place for the family over generations. We are often asked how to keep such a property in the family and there are several techniques to consider, all of which have pluses and minuses, and may have financial costs as well. Most importantly, it is essential that you confirm with your children and their families that they wish to retain the property – with due respect, they may have other plans!

• Leave the property and its contents in your Will to your children in equal shares; they will each own a fractional interest in the property and will each be responsible for their share of the upkeep, maintenance, taxes, and any improvements. This can be difficult if they have different financial circumstances and if they don’t all want to use the property for similar periods of time – in our experience a “governance structure” or Bill of Rights is essential to keeping the peace.

• Place the property and its contents in a Limited Liability Corporation (“LLC”) and bequeath or gift units of the LLC to your children. If you are in a financial position to fund the LLC with a sum of money (an “endowment”) to take care of the property, that may limit the problems above.

• Transfer the property to a Qualified Personal Residence Trust (“QPRT”) – this is an advanced technique that is used when estate taxes are or may be an issue; the use of the trust reduces the gift tax valuation.

For more Lessons from Lee, visit our support page!