Many families have an out-of-state cabin or vacation home that’s passed down by putting the property in a will. While that’s an option, this strategy might not make it as easy as you think for your family to inherit this home in the future.
Probate is the legal process where a will must be proved to be valid in court, which can quickly become time-consuming and expensive – especially when dealing with ancillary probate (probate outside of one’s home state). Let’s discuss some options to help avoid probate on an out-of-state vacation home that can save your family headaches in the future.
Ways to Avoid Probate on Your Vacation Home
- Revocable trust: This type of trust can be altered while you’re still living, especially as your assets or beneficiaries change. By putting your vacation home in this trust, you can avoid your property going through probate. Other benefits of a revocable trust are that you could set aside money in the trust specifically for the management and upkeep of the property, and you can leave instructions on how the vacation home should be managed upon your death.
- Irrevocable trust: Similar to the revocable trust, assets can be put into an irrevocable trust. You can leave instructions and money for the management of the vacation home. However, once an irrevocable trust is established, you can’t amend or terminate it.
- Limited liability company (LLC): You can create an LLC and list your home as an asset of the company to eliminate probate and save you or your family from the risk of losing any other assets outside of the vacation home if sued. You can also protect yourself if you rent out the vacation home and the renter decides to sue. With the creation of a limited liability company, you can also create a plan to help with the future management of the home.
- Deed transfer: While this option simplifies transferring the property to someone else, issues may arise when making decisions surrounding the home. Most issues usually come from not explicitly writing your wishes for the management of the house in detail.
- Joint ownership: You can hold the title to the property with another who’s given the right of survivorship. However, like with the deed, this can lead to miscommunication about how the house should be cared for and used.
So what’s the best move for optimal protection of your out-of-state vacation home? An estate planning attorney is the answer to make sure you get the answers to your legal questions and enhance the protection of your assets beyond just your vacation home.
Prepare for your family’s future with Ozarks Legacy Law to help make certain that your property continues to be a place where cherished memories can be made for years to come. Talk to a qualified estate planning attorney for expert legal advice for your specific situation.
