Summer is here, the fish are biting, and cabin season has begun. As you travel up north, you may also want to think about cleaning up any legal issues that may affect your cabin.
Most cabin owners want to “keep it in the family.” But how does one exactly go about doing that, and how does it really work?
There are many tools available to a cabin owner to protect it from unwanted owners or creditors. These options include cabin trusts, cabin LLCs, cabin family agreements, and other similar instruments. These options can help to:
(a) protect against a family member who fails to meet their financial commitments to the cabin;
(b) handle internal conflicts between family members regarding operation, maintenance, and improvements to the cabin;
(c) limit the liability of the family members if there is an accident to a third party;
(d) protect the cabin from outside third party creditors seeking assets of a family member;
(e) prevent unwanted third parties from gaining ownership interest in the cabin (ex-spouses, e.g.); and
(f) protect the legacy of the cabin, to ensure that it will be there for all future generations.
Additionally, cabin owners need to know how any of these methods of protection will affect their own estate planning and tax planning. Depending upon the circumstances of the cabin owner, some of these options may be more advantageous than others.
You will also want to think about the following:
(a) under what circumstances could a family member be “bought out” and how would the price be determined and the purchase be paid for by the remaining members;
(b) what should happen in the event a sibling was to become divorced;
(c) how should the interest of a deceased family member be treated; and
(d) under what circumstances, if any, could the entire property be sold to an outsider.
Just as you need to undertake preparations to maintain the cabin, you may want to undertake similar preparations to prepare for the future of your cabin, to ensure that you protect what you have worked so hard for, where you have made many happy memories.
We would be happy to advise you on these issues and any other legal issues that affect you or your loved ones.