Kalamazoo MI- 2014 – If you have or plan to purchase a Kalamazoo lake or vacation home or family cottage, take steps now to ensure that the Kalamazoo area family cottages are passed on to children and grandchildren so that they are able to continue to be used for generations.
Cottage succession planning should be done in conjunction with other estate planning. Statistics show that 75 percent of Americans do not have an estate plan in place. Many of those people also have vacation homes or cottages in the greater Kalamazoo area. It is important to meet with an estate planning attorney to ensure that all the plans are in place to keep the family cottage or vacation home as affordable as possible when considering passing it on to your children or grandchildren.
Here are some of the questions that should be answered regarding Greater Kalamazoo or Portage area lake homes, family cottages or vacation homes. How will the capital gains tax be paid when the property is transferred? How will family members share the expenses of ongoing operation and maintenance, as well as annual property tax payments? What if a sibling is late in paying his pro-rated share of the expenses? Will family members be allowed to bring guests or rent out the cottage to non-family members? Can a family member redecorate or renovate the cottage on a whim, or will it require a group vote? Will pets be welcome at the family cottage? If a sibling dies, will ownership revert to his or her spouse?
There are several ways to transfer vacation property to the next generation. One common method that vacation property in Michigan is transferred to the next generation is under a tenancy-in-common agreement of family ownership. Another method is by forming a limited liability corporation where an operating agreement for the LLC is developed that includes rules everyone must abide by.
One of the problems that was encountered in the cottage succession planning is that property taxes were uncapped in the transition from parents to children or grandchildren.
Thanks to Public Act 497 of 2012 families now have the option of transferring residential property without uncapping property taxes. Read the article posted in the Grand Rapids Business Journal to get a bigger picture understanding of the implications of Public Act 497 of 2012.
The new law is limited to first-of-kin relationships and applies to residential property only.
If you are looking to purchase a family cottage or vacation home in the Kalamazoo area, we suggest that you give us a call (269-350-5514) so we can set up some great tools which will alert you at the same time as REALTORS when great vacation properties come on the market. This is a completely free service (as are all of our home buyer services) and we will help you find a great Kalamazoo lake home or family cottage. You will find the website FindHomesinKalamazoo.com a great place to start your search for greater Kalamazoo area lake or vacation homes.
If you are considering selling your cottage we have an 81 point marketing plan that will get your family cottage sold! We can also connect you with an excellent estate attorney who will be able to explain all the implications of bequeathing your vacation home as well.
Talk to you soon!