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created for the sole purpose of transferring a personal residence to family members. The parents/grantors will retain the right to live in the home for a set number of years; at the end of that term, the home passes outright to, or in trust for, the parents' children. Family entities Using a structure such as a limited liability company (LLC) or family limited part- nership (FLP) to hold title to the family vacation home can provide a number of benefits. One such benefit is the ease in which parents may transfer ownership interests to chil- dren while still maintaining control of the entity as the managing member or general partner (including control over timing and amount of distributions). Children or other family members can obtain non-managing member interests or limited partner interests through a simple assignment of interest instru- ment. This structure com- pares favorably to holding undivided fractional interests of real estate in that the entity's operating agreement can govern the management of the vacation home and provide clear expectations around the use of the home and upkeep responsibilities of the family members. Setting goals for future rental activity In addition to the adminis- tration of operating expenses, the family entity agreement can also set clear guidelines for future rental activity. The selection of a rental agency, term lengths and rates should be discussed and formalized so that all family members feel comfortable with outside use of the property. Plans for rental income disbursement, uses or reinvestment can also be determined in advance. With larger families and certainly with the addition of rental activity, scheduling co- ordination will become a high priority and possibly a source of frustration if not managed appropriately. The family can select the managing member who will address these issues and provide clear guidance on expectations for personal and rental use. Multigenerational trusts Some families may wish to solidify the family vacation home as a part of their legacy for multiple generations. A multigenerational trust can provide the structure neces- sary to preserve that legacy and would be designed to guard against the possibil- ity that the home would be exposed to future transfer tax liabilities. Ideally, this trust would be exempt from the generation-skipping transfer (GST) tax and administered in a state that allows for per- petual trusts. Authored by UBS Financial Services Inc., provided courtesy of Anthony Cristiano, First Vice President and Financial Advisor and Gregory Chapin, Senior Wealth Strategy Associate. This report is provided for informational and educational purposes only. Providing you with this information is not to be considered a solicitation on our part with respect to the purchase or sale of any securities, investments, strategies or products that may be mentioned. In addition, the information is current as of the date indicated and is subject to change without notice. Neither UBS Financial Services nor its employees (including its Financial Advisors) provide tax or legal advice. You should consult with your legal counsel and/or your accountant or tax professional regarding the legal or tax implications of a particular suggestion, strategy or investment, including any estate planning strategies, before you invest or implement. Important information about advisory and brokerage services In providing wealth management services to clients, we offer both investment advisory and brokerage services, which are separate and distinct and differ in material ways. For information, including the different laws and contracts that govern, visit ubs.com/workingwithus. 170227-0369_S © UBS 2017. All rights reserved. The key symbol and UBS are among the registered and unregistered trademarks of UBS. UBS Financial Services Inc. is a subsidiary of UBS AG. Member FINRA/SIPC. Anthony Cristiano is a partner in the Daybreak Wealth Management team at UBS Financial Services in New York City. He is First Vice President and Portfolio Manager. In addition to his practice advising affluent families and executives, Mr. Cristiano is also a Senior Retirement Plan Consultant at UBS, providing guidance to Corporate Retirement Plans. The primary focus of the Daybreak Group is to provide objective, comprehensive wealth advice to their clients. In conjunction with UBS' world class resources, his team provides a holistic approach to wealth management, one that is inextricably linked to unique needs, goals, and values of each client. Planning for the use and transfer of the family va- cation home requires considerable forethought. One must not only bal- ance family member ex- pectations and the emo- tional aspects of what the home may mean to each individual, but must also navigate various tax char- acteristics and ownership structures. Creating a plan that navigates these com- plexities is challenging, but creating such a struc- ture can provide enjoy- ment of the family vaca- tion home for generations to come. VUE ON FORTUNE V U E N J . C O M 128

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