Many families have a beloved out-of-state vacation home where many cherished memories have been made. Families often plan to pass these vacation homes down by putting them in a will. While this is an option, this strategy might not make it as easy as you think for your family to inherit this home in the future.
So why should you consider a more comprehensive plan than just leaving an out-of-state vacation home in your will? The answer is simple: to protect your loved ones from the often expensive, overwhelming, and complicated process of dealing with not only in-state probate but also out-of-state probate. Probate is the legal process where a will must be proved to be valid in court, which can quickly become time-consuming and expensive, especially when dealing with ancillary probate (probate outside of one’s home state).
There are options that help to avoid probate with an out-of-state vacation home, saving your family members from a major headache in the future.
Revocable trust: This type of trust can be altered while you are still living, and as your assets or beneficiaries change. You have the option to put all your assets into this trust, but at the very least by putting the vacation home into the trust, you will help family members avoid probate. Another benefit of a revocable trust is you could set aside money in the trust specifically for management and upkeep of the vacation home. You also have the option to leave instructions on how the vacation home should be managed upon your death.
Irrevocable trust: This trust is similar to the revocable trust; any assets can be put into an irrevocable trust. Most importantly, at least pertaining to this article, is that the vacation home can be put into this trust. Additionally, you can leave instructions and money for the management of the vacation home. However, when the irrevocable trust is established, you are unable to amend or terminate it.
Limited liability company (LLC): By creating an LLC and listing your home as an asset of the company, you not only eliminate the problem of probate, but this can also save you or loved ones from the risk of losing any other assets outside of the vacation home if sued. This is a great way to protect yourself while renting out a vacation home in the event that a renter were to sue, the most you could lose is that property, rather than possibly losing any other assets. By having beneficiaries continue to rent the home will help keep out-of-pocket expenses low for beneficiaries in the future. With the creation of an LLC, you are also able to create a plan to help with future management of the vacation home.
Transfer via a deed: While this may appear as a straightforward way to pass the vacation home down to a loved one, when you have multiple children, issues may arise when making decisions surrounding the home. This is usually because your wishes for the management of the house are not explicitly detailed in writing.
Joint ownership: With this option you can hold the title to the property with another individual that is given the right to survivorship. This, like with the deed, can lead to miscommunication with how the house should be cared for and used.
Whether you are in the process of buying an out-of-state vacation home or have had a vacation home for years, it is always a smart idea to plan for the future to help ensure that the property continues to be a place where cherished memories can be made for years to come. When creating any type of estate plan be sure to work with a qualified estate planning attorney that can give you expert legal advice for your specific needs.
Stephen J. Lacey, JD, LLM-Tax, is a managing member of the law firm Lacey Lyons Rezanka in Melbourne, Florida. Lacey concentrates his practice in the areas of estate planning, probate, asset protection, elder law, Medicaid planning and trust administration. Contact Attorney Lacey at 321-608-0890 or visit www.LLR.Law.
This article originally appeared on Florida Today: Avoid probate on an out-of-state vacation home: Know your options