The Family Cottage
Of all the assets a family owns, nothing is as treasured as the family cottage 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 the other assets, including the family home, and divide equally among the kids.
However, with a family cabin, the parents usually don’t want the children to liquidate the vacation home, but rather have it live on for future generations to enjoy with their adult children just like the adults did with their kids.
Unfortunately, this often doesn’t happen. Usually, a cottage that is left to the kids invites enormous battles amidst the 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 the family vacation property are unique to that family and require a unique and flexible solution.
A solution exists to protect the family cabin and strengthen family relationships. The solution is to leave that special property in a Trust designed specifically that addresses the above issues. The Trust partitions each of the situations and establishes “modes of operation” for all the common issues that often plague relationships for future generations and establishes a framework for helping families deal with inevitable conflict. The result is that the owner’s young ones will continue to enjoy the family cottage and continue to create family memories long after the parents pass on.
Many families have accumulated 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 to be valued. If the collectibles are incorrectly valued for tax purposes, additional tax, 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 for 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.
Examples of non-charitable techniques for art and collectibles are simple annual exclusion gifts, gifts to an irrevocable trust, unified credit gifts, or an Art LLC.
With Offices in Madison, WI and Evansville, WI, the attorneys at the Wilson Law Group assist clients with Estate & Business Planning, Probate & Trust Administration, Elder Law and Medicaid Planning throughout Southern Wisconsin including Verona, Middleton, Sun Prairie, Cross Plains, Oregon, Black Earth, Janesville, Jefferson, Fort Atkinson, Baraboo, Reedsburg, Richland Center, Mount Horeb, Monroe, Beaver Dam, Dane County, Rock County, Green County, Iowa County, Richland County, Sauk County, Columbia County, Dodge County and Jefferson County.