If you have a family cabin that you would like to leave as a legacy to your family, this might be of interest.
Recently I had the opportunity to learn from an attorney in the Twin Cities that specializes in cabin trusts, Joel Mullen.
In Minnesota, cabins are a huge legacy item that people hope to keep in the family, and there are several strategies I was unaware of until listening to this presentation.
Minnesota is the only state that allows the kids to not only control their cabin inheritance without a high-cost corporate trustee (usually a bank) and also have creditor & divorce protection.
Joel pointed out that there is a right way and a wrong way to leave the cabin to the kids. Divorce and bankruptcy can cause big problems for all the owners. Plus kids tend to have different incomes, locations, desire to use the cabin, marital status, etc. all of which can complicate things if not planned for.
Good planning can avoid probate, pass the assets to the next generation, plan for incapacity, and minimize or avoid estate taxes.
You can plan for how often and when the cabin is used, what the equity in the cabin would be and how it would be split up through future generations, how taxes and expenses would be paid, how a person could be bought out of their holding in the cabin, and creditor issues.
So what are the options? Any cabin owner has at least four estate planning options:
- Force the sale at death
- Leave the cabin outright to the kids
- Protect it with an asset protection trust
- Update your plan with a family cabin trust or LLC
Often assets can be left at death to be set aside to help with maintenance and taxes.
A cabin trust could serve as a "cabin constitution," a way to resolve disputes and arrange for the fairness of procedures through various contingencies.
The trust can cascade down to the grandchildren if desired, and be designed so that when the children without kids pass away their share goes to the other members to keep it in the family and avoid a forced sale.
I love this quote "An estate is basically a lifetime of good decision making, living reasonably, saving, planning, and Minnesota law can help keep inheritances in the family."
Thanks for taking a look!
Tom Gartner, MSAPM, CFP®