VUE

Fee simple transfers The most common and under- standable method of property transfer is a fee simple trans- fer by deed. When transfer- ring the vacation home to one or more children, parents may create different interests through a fee simple transfer; including tenants in common, joint tenants with right of survivorship or a life estate. A benefit of transferring real estate by fee simple deed is that it is relatively inexpen- sive, typically only requiring certain filings in county records. Revocable living trusts Many individuals choose to use a revocable living trust as the primary vehicle to hold and manage assets during their lifetimes. As the indi- vidual can be the trustee of his or her own revocable liv- ing trust, he or she maintains full control and use of their assets. He or she also has the ability to name co-trustees and successors who may act upon that individual's death or disability. Real estate held in a revoca- ble living trust should not be subject to probate. For these reasons, many parents choose to title the family vacation home in their revocable living trusts. Because there is continuity of management through co-trustees and successors, parents can feel confident that the family will be able to use the home without interruption or court involvement should death or disability occur. Qualified Personal Residence Trusts (QPRTs) Parents interested in mini- mizing transfer taxes as- sociated with the gift of a family vacation home may consider a Qualified Personal Residence Trust (QPRT). The Internal Revenue Code contains specific provisions governing how this trans- action can be structured. A QPRT is an irrevocable trust Summers at the lake house, winters at the ski lodge and time spent at family vacation homes creates very special memo- ries. These retreats are often some of the most cherished family assets, not only because of the economic value of the property, but also because of an emotional attachment to these places. In some cases, the vacation home has been in the family for generations. In others, the vacation home is a more recent addition to the family, but one where a sig- nificant amount of time, energy and money were expended to create a special family retreat. Consequently, many family members have a heightened focus and interest in ensuring that the family vacation home is preserved for the next gen- eration and that it passes in a fair and equitable manner. Plan- ning for the use and transfer of the family vacation home is challenging because it must not only navigate the legal and tax aspects of wealth transfer, but also the emotional consid- erations of the family's various members. Transfer of the family vacation home can take many forms, each with its own benefits and disadvantages. It is also im- portant to have a plan for the ongoing management and maintenance of the property. By Anthony Cristiano THE FAMILY VACATION HOME Keeping it in the Family VUE ON FORTUNE V U E N J . C O M 126

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