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The Family Vacation Home… Haven or Havoc?

5 Jul 2018 by: Matt Showley 

 

For many families, great memories have been made spending time together at a family vacation home.  Normally, this is a property that has been in the family for decades and is located in a vacation spot which everyone enjoys. It represents a safe haven from the world, often allowing all family members to periodically escape.

Most often the property was bought and owned by just one family until successive generations came along. As time passes, it is not unusual for the ownership in the property to be shared with other family members via gifting, inheriting, or purchasing of interests in the property.

Without adequate planning, shared ownership in the family retreat may cause future misunderstandings and heartache.  Differences of opinion regarding use, décor, damage, and funding can become so disruptive, that disputes regarding the family home can flow over into family relationships and holiday gatherings.

Managing and enjoying a family-shared property needs the same infrastructure, written agreements and formalities just as much as a business does.  Before the parents or grandparents actually pass ownership or control to the next generation, it is critical to establish a clear understanding as to how decisions will be made, who will be in control, what consequences there will be if jointly developed rules aren’t followed, and how financial responsibilities will be handled.

Having a family planning session to create guidelines can lead to a more successful co-ownership.  If it’s not possible for the family members to physically meet, they should connect via conference call or video conferencing. Some of the meeting agenda topics could be:

Decision making—One owner, one vote? Do in-laws get a vote? Does majority rule?

Management meetings—How often and who attends?

Family weekends—For siblings and spouses only, with or without kids?

Usage—Who gets to come and when?  How is that determined? Drawing names? A lottery? Trading of dates allowed? Set aside certain weekends for all family weekends, like Independence Day?

Governance—Who is in charge? Does this responsibility rotate?

Budget—How to handle expenses and damages? Where will the operating funds come? What happens if one family doesn’t have enough resources to contribute their fair share? Do only those who financially contribute to its upkeep get to use it?

Sell or keep—What if some family members want to sell the property? How is that determined? What is the purpose of having this family property?

Terminating— How does a family withdraw from ownership? How is the value determined and what will be the buyout provisions in the case of death, divorce, disability or disinterest?

Although a shared family property can be a strong bonding agent for the family, it requires more management efforts and time with each succeeding generation. Having basic rules to avoid distrust among family members is crucial to the ongoing enjoyment of the vacation property. However, if done with proper planning, the benefits can far outweigh the added management burdens. Think of the advantage of having second and third cousins convene at the family vacation home once a year which promotes closer on-going relationships that could become diluted without this effort. Wonderful family moments can be created by shared ownership in the family mountain cabin, beach home, or lake lodge, spanning generations.  Are you planning a haven or creating havoc?




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