Minnesotans love staying in a cabin by one of our state's many lakes. Around the Alexandria area, there is a booming business in renting cabins to tourists, but many people would prefer to have their own cabins.
Some lucky Minnesotans own cabins that have been passed down from a previous generation. Perhaps they inherited the cabin from their parents and now co-own it with their siblings, their adult children and other family members.
This type of ownership has great advantages, but it also has big challenges. One such challenge comes about when deciding how to keep the cabin in the family for the next generation.
Cabins and estate planning
If you own a cabin and you are planning your estate, you should provide for the cabin, just as you should for your main home and other property. This may be as straightforward as bequeathing your cabin to one of your children in your will. However, things can get trickier in cases with multiple family members sharing ownership of a cabin.
First, note that if you co-own the cabin with other family members, you can only pass down your interest in the cabin. That means, if you co-own the cabin with your siblings, you could give your share to your adult children in your will, but your children will then have to share ownership of the cabin with your siblings. If your siblings leave their shares in the cabin to their own siblings, in time the cabin will be owned by a large number of cousins.
In the best-case scenario, all the cousins get along and will continue to care for the cabin, but there are a lot of things that can go wrong in this type of situation. Some of the cousins may be more dedicated to the cabin than others. Some may move away from the area. Typically, one or more of the owners end up shouldering more of the physical and financial burdens that come with property ownership. This can lead to resentment and can also mean that important bills go unpaid and needed repairs don't get made.
One way to get around this problem is by putting the cabin in trust. A trust is a legal tool that places property in the care of a trustee. The trustee has a fiduciary duty to keep the property for the benefit of the named beneficiaries of the trust.
For instance, you may name a professional or trusted individual as trustee and name your children as beneficiaries. This can help ensure that the cabin is cared for and that the beneficiaries get to enjoy the cabin without arguing over who is in charge.
Trusts can be adapted to many circumstances and customized to meet many needs. However, one great disadvantage of cabin trusts is that, once set in place, they can be difficult to change. If the beneficiaries decide they need to sell the cabin or otherwise change their relationship to the trust, they will need to go through a complex legal process.
Many of us have happy memories of our family cabins. It gives some people a warm feeling when they imagine that a cabin will stay in the family after they are gone. There are several ways to accomplish this, but they call come with advantages and disadvantages. Attorneys with experience in cabin trusts can help people understand their options for preserving their cabins.