The Family Cabin
Of all the assets a Wisconsin family owns, nothing is as treasured as the family cabin or vacation home. When designing a family’s estate plan, the cabin is the one asset that the family hopes to preserve after a loved one passes. Families quite often liquidate all their other assets, including the family home, and divide the proceeds equally among the kids. The vacation home, on the other hand, is kept in the family for future generations to enjoy.
Unfortunately, this often doesn’t happen. A cabin that is left to the kids can invite enormous conflict amongst siblings. Why? Because they cannot seem to agree on its use, including the following issues:
- Scheduled use
and other issues that often only the family can foresee. In fact, many conflicts that arise over a vacation property are unique to that family and thus require a unique and flexible solution.
The solution is to leave your family’s special property in a trust designed specifically to address the above issues. The trust partitions each of the situations and establishes “modes of operation” for all the common issues that often plague relationships, as well as establishing a framework for helping families deal with inevitable conflict. The result is that the owner’s young ones will continue to enjoy the family cabin and continue to create family memories long after the parents pass on.
Many families accumulate valuable collections or artwork. While these items are considered personal property as part of the estate plan, they are hardly easy to deal with when it comes time to pass them on to potential heirs.
One of the most important considerations in planning for the disposition of art and collectibles is how the items are valued. If the collectibles are incorrectly valued for tax purposes, additional taxes plus penalties and interest can be imposed. The general rule for federal estate, gift, and income taxes is that the transferred items are to be valued at their fair market value. Sometimes, the tax authorities will accept the buyer’s cost or a recent sale as evidence of fair market value. Most often, however, fair market value will need to be determined by an appraisal of the transferred property.
Some of the most exciting opportunities in planning for art and collectibles are charitable techniques. Structured properly, charitable gifts and bequests of art and collectibles can be a tax-efficient way of keeping a collection intact and creating a legacy.
Examples of non-charitable techniques for art and collectibles are simple annual exclusion gifts, gifts to an irrevocable trust, unified credit gifts, or an LLC.