Vacation Homes

Five Estate Planning Topics for Sunny Summer Days

by

Summer is one of the most beloved seasons here in New England.  We wait for it all winter, eagerly anticipating its arrival through the wet and cool spring months, and lament its short-lived existence.  But precisely for these reasons we appreciate our summers here in New England more than those who live in other parts of the country who have warmth and sunshine for many more months of the year.  Here are five things to think about as you are enjoying these fleeting summer days.

1. Planning for Children Leaving for College

For all you parents with graduating seniors, a friendly reminder that once your child turns 18 they are considered an adult in the eyes of the law. This means that, as a parent, you no longer have the legal authority to make decisions on your child’s behalf or to access their medical or educational information without permission. If you want to be able to assist your child with financial and medical decisions, or make those decisions for them if they are unable, and want to speak with your child’s health care providers and school, your child should speak with an attorney and have a few key documents prepared and signed before they go away to college.

A Durable Power of Attorney will give one or both parents the legal authority to act on a child’s behalf to handle their legal and financial matters, such as banking snafus, credit cards, student loans and tax issues.  A Health Care Proxy will designate a parent to make health care decisions for a child in the event they have a serious health issue and are unable to make their own health care decisions.  Without these documents, court authority may be required to make legal, financial or health care decisions for your child.

Two lesser known but still important documents are a HIPPA Authorization which permits a child’s health care providers to speak with the child’s parents (or any other individual identified on the HIPAA form) about the child’s medical condition even if the child is still able to make their own health care decisions. This can come in handy if your child is in the school infirmary for a minor medical issue or is hospitalized with a more serious condition and you are looking for information.  A FERPA Authorization permits the release of your child’s protected academic and financial information by their college or university to the people listed in the document, which may include, for example, information about courses, financial aid, tuition, and disciplinary matters.

2. Planning for the Family Vacation Home

Vacation homes are special assets that require special planning considerations.  Important things to think about include: 

  • Who will receive the property?  Do all of your children use the property, or want to support the property financially as an owner after your death?  Involve your children in the decision-making process now and encourage them to be honest about their feelings about inheriting the property.  Your children may recognize that because of where they live or because of their personal financial circumstances, ownership of the property is just not realistic.  Knowing who wants to keep the property and who has no interest in owning a second home is vital information in the planning process and will make the plans you make more likely to work.
  • Who will pay for maintaining the home?  It costs money to maintain a vacation home, including paying taxes, insurance, utilities and repairs – and not all inheritors are of equal means.  Enabling your family to keep a vacation home long-term often means leaving some funds to pay for the upkeep of the property for at least a few years following your death.
  • Consider the estate and capital gain tax implications of gifting a vacation home to your children, or passing the property on to them at death.  In the case of estate tax, make sure there are sufficient funds to pay these taxes so that the vacation home will not have to be sold or mortgaged to make these payments when the time comes.
  • Consider putting a system in place for making decisions, including the use of the property, when and if to make major repairs, and when and if the property is rented or sold. Decision-making challenges increase exponentially the greater the number of people involved.  By putting a system in place, you can reduce the friction that may arise among children with competing interests who are trying to work this out after you are gone.
  • If a vacation home is transferred to a trust, make sure you understand local requirements regarding beach stickers and related perks available to owners of vacation properties.  Oftentimes additional documentation must be provided to the town in which the property is located to make sure you can continue to visit the beach without issue as you have done in the past.

3. Special Considerations for Rental Properties

Many owners of vacation homes rent these properties for some or all of the summer months, generating income that helps pay the costs of owning such a property.  As estate planners, in addition to planning for ownership of vacation property after an owner’s death, we also need to take into account the additional liability potential associated with rental properties.  

The first line of defense is always to be sure you have adequate insurance on the property, including liability insurance which will offer some protection if a renter or their guest is injured on the property.  Owning a vacation home in a limited liability company can offer an additional layer of protection for your personal assets against a judgment if your insurance coverage is not sufficient.  Making sure you educate yourself about and follow all local laws and regulations concerning rental properties is also important. 

4. Recreational Vehicles Need Planning Too

Any vehicle that has a title is an asset that should be planned for, as transferring title to such an asset at death can mean the involvement of the probate court.  Because insurance rates can be higher for vehicles held in trust, transferring cars to trust (at least in Massachusetts) is not ideal. Joint ownership may be appropriate, as may be transferring title before an owner’s death.  LLCs may be used for boats where liability protection is a concern.  Additional planning considerations may be involved with larger vessels registered with the Coast Guard.  As with all vehicles, make sure your recreational vehicles are adequately insured and that you have sufficient liability insurance, including an umbrella policy, that will protect you and your other assets in the event of an accident.

5. Plan to do Your Estate Plan When you are Planning Your Vacation, Not When you are About to Leave

As much as we would love to do an estate plan in a week for everyone who is about to leave on vacation and is panicked about getting on a plane without a Will, unfortunately that is not possible.  Good estate planning takes time and careful consideration of the issues involved.  A rushed estate plan is more costly and often does not resolve issues that could be addressed with more thoughtful planning.  

If you are concerned about the state of your estate plan and are planning a trip, contact your estate planner several months in advance to ensure you will have the time to discuss your planning thoughtfully, to have documents prepared and signed that will effectively carry out your planning goals, and to fund your trust and designate beneficiaries appropriately before getting on that plane.

For many of us, summer is time when life tends to slow down a bit – kids are out of school, some businesses offer shorten work weeks, and the longer days make us feel like we have more time.   These factors can make the summer months a good time to take care of matters that take a back seat during the busier times of the year.  If you would like to discuss any of these summer planning issues, or estate planning in general, we are here to help.  Planning now will give you the peace of mind to enjoy the summer months without worry.

Maria C. Baler, Esq. is an estate planning and elder law attorney and partner at Samuel, Sayward & Baler LLC, a law firm based in Dedham. She is also a former director of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA), and the former President and current member of the Board of Directors of the Massachusetts Forum of Estate Planning Attorneys. For more information, visit www.ssbllc.com or call (781) 461-1020. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney.

June 2025

© 2025 Samuel, Sayward & Baler LLC

Five Thoughts About Planning for your Vacation Home

by

It’s officially summer, and our thoughts turn to summer fun, perhaps at a vacation home of a friend or family member or, if you are lucky enough, yours! If you are the owner of a vacation home, it’s never too early to think about planning for this unique asset. Is this a property you wish to pass on to your children and grandchildren so the good times can continue long after you’re gone? In many cases, the property holds a special place in your family’s hearts and memories, so it is especially important to make sure the property will be there for them to enjoy. Here are five things to consider when planning for your vacation property:

1.  Do Your Children Share Your Hopes and Dreams?
It’s important to determine if you and your family share the same vision for the future of your vacation home. You may intend to leave your vacation home to all of your children to use and enjoy for their lifetimes, but it is important to consider whether your plan is realistic. Take a hard look at how the property is used and by whom. Do all of your children enjoy the property and will they continue to do so in the future, taking into account their busy lives and where they live? Or is the home primarily used by one or two children who live close enough to visit often? When planning for the future of your vacation home, talk to your children about your thoughts and encourage them to be honest with you. Knowing who wants to keep the property and who has no interest in owning a second home is vital information before you begin your planning. If the home will be left to some but not all of your children, you should consider whether it is important to equalize the inheritance each will receive, and whether that is possible considering the other assets you own.

2.  How Will the Bills Get Paid?
Acquiring a second home is only half the battle. Maintaining a second property requires time and resources. If you are leaving vacation property to family members, consider whether they will be able to maintain it taking into account the carrying costs of the particular property, its age, and anticipated future expenses. If you intend for the owners to contribute to the cost of maintaining the property after your death, consider whether all of them can afford to do this, or whether it makes sense to leave the property (and the financial burdens of its maintenance) to those who can afford the expenses that go along with owning such a property. If you are financially able to do so, you may want to leave extra money to support the property which can be used to pay ongoing expenses and make repairs as needed, and take the burden of those expenses off of your family members. If this is the route you choose to go, don’t underestimate the funds that may be needed, and err on the generous side if you are unsure.

3.  How Will Decisions be Made?
No matter how smart your children are or how well they get along, it is always helpful to have a plan for how decisions will be made about who can use the property and when, what improvements will be made to the property, and when and if the property should be sold. It is helpful, whether in a Trust or other written agreement, to set out rules that clearly govern how these matters are decided, and how disputes are resolved. If a child cannot contribute to his share of the expenses, or wants to sell his interest in the property, a structured plan will allow for such transitions, including the opportunity for siblings to buy out one another. If disagreements arise and there is no clear path to resolution, this will ultimately lead to the sale of the property, which is not a good result unless it is one that is agreed on by all involved.

4.  Don’t Forget the Tax Planning.
Vacation homes are often a beloved asset, but they are an asset nonetheless, subject to estate tax like the other assets in your estate. If you have a taxable estate (which means the total value of all of your assets exceeds $1 million if you are a Massachusetts resident), it is crucial to consider how estate taxes will be paid when planning for a vacation home that will not be sold following your death. In some sad situations, the next generation would love to keep the vacation property, but the estate taxes payable at the parents’ deaths are so steep that they cannot afford to do so. Consider undertaking planning to reduce the tax bite at your death. This type of planning may include gifting the property or an interest in the property during your lifetime. Consider whether owning vacation property in an LLC may be appropriate if the owner lives out of state and the vacation home is located in Massachusetts. Consider using life insurance to provide a resource from which estate taxes can be paid, reducing the possibility that the property will need to be sold to satisfy a tax obligation. And consider incorporating generation-skipping tax planning into your estate plan to reduce or eliminate estate tax that would otherwise be payable in your children’s estates

5.  Transfer during lifetime or at death?
Many vacation homeowners intend to continue to own their property during their lifetimes and leave the property to their heirs at their deaths. By doing so, they remain the sole decision-makers and keep their options open: they could sell the property, rent it out, change their minds about who will inherit it, etc. However, transferring ownership to the next generation during the parents’ lifetimes can make sense for tax planning or long-term care planning reasons. Lifetime gifts of vacation homes are something that should be considered, balancing the capital gain tax and control implications of such a gift against the estate tax cost of retaining ownership until death. However, keep in mind that if you intend to use your vacation home after giving it away, rent will need to be paid to the new owners to avoid inclusion in your estate for estate tax purposes.

Thoughtful and timely planning for a vacation property can ensure the property will pass to future generations in a way that will minimize issues and maximize the chances the property will be enjoyed by your family for generations to come. If you have a vision of your descendants enjoying your beloved cottage and building memories there, take the necessary steps now to make your wishes a reality.

Maria Baler, Esq. is an estate planning and elder law attorney and partner at Samuel, Sayward & Baler LLC, a law firm based in Dedham. She is also a former director of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA), and the former President of the Board of Directors of the Massachusetts Forum of Estate Planning Attorneys. For more information, visit www.ssbllc.com or call (781) 461-1020. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney.

July 2023
© 2023 Samuel, Sayward & Baler LLC

Five Thoughts About Planning for your Vacation Home

by

With summer upon us and pandemic-induced quarantines a distant memory, at least here in the Northeast, we are all looking forward to some fun this summer.  If you are lucky enough to have a second home you are probably spending some well-earned vacation time there right now with family members, creating lasting memories. If you are the owner of a vacation home, it’s never too early to think about the future. 

Is this a property you wish to pass on to your children and grandchildren so the good times can continue long after you’re gone? In many cases, your heirs may not be able to purchase a vacation home on their own so it is especially important to make sure the property will be there for them to enjoy.  Here are five things to consider when planning for your vacation property:

1. Do Your Children Share Your Hopes and Dreams?

You may intend to leave your vacation home to all of your children to use and enjoy for their lifetimes. When planning, it is important to consider whether these intentions are realistic. Take a hard look at how the property is used and by whom. Do all of your children enjoy the property and will they continue to do so in the future, taking into account their busy lives and where they live?  Or is the home primarily used by one or two children who live close enough to visit often? When planning for the future of your vacation home, talk to your children about your plans and encourage them to be honest with you.  Knowing who wants to keep the property and who has no interest in owning a second home is vital information before you begin your planning.

2. How Will the Bills Get Paid?

If you intend for your children to contribute to the cost of maintaining the property after your death, consider whether all of your children can afford to do this, or whether it makes sense to leave the property (and the financial burdens of its maintenance) to the child or children who can afford the expenses that go along with owning such a property.  If you are financially able to do so, you may want to leave extra money to support the property which can be used to pay ongoing expenses and make repairs as needed, and take the burden of those expenses off of your family members.  If this is the route you choose to go, don’t underestimate the funds that may be needed, and err on the generous side if you are unsure.  

3. How Will Decisions be Made?

No matter how smart your children are or how well they get along, it is always helpful to have a plan for how decisions will be made – such as who can use the property and when, what improvements will be made to the property, and whether the property should be sold.  It is helpful, whether in a Trust or other written agreement to set out rules that clearly govern how these matters are decided, and how disputes are resolved.  If a child cannot contribute to his share of the expenses, or wants to sell his interest in the property, a structured plan will allow for such transitions, including the opportunity for siblings to buy out one another

4. Don’t Forget the Tax Planning.  

Vacation homes are often a beloved asset, but they are an asset nonetheless, subject to estate tax like the other assets in your estate.  It is crucial to take into account how estate taxes will be paid when planning for a vacation home that will not be sold.  In some sad situations, the next generation would love to keep the vacation property, but the estate taxes payable at the parents’ deaths are so steep that they cannot afford to do so.  Consider undertaking planning to reduce the tax bite at your death by gifting the property or an interest in the property during your lifetime, and at your children’s death by incorporating generation-skipping planning.  If taxes must be paid, consider using life insurance to provide a resource from which estate taxes can be paid, reducing the possibility that the property will need to be sold to satisfy a tax obligation.

5. Transfer during lifetime or at death? 

Many vacation homeowners intend to continue to own their property during their lifetimes and leave the property to their heirs at their deaths.  By doing so, they remain the sole decision-makers and keep their options open: they could sell the property, rent it out, change their minds about who will inherit it, etc.  However, transferring ownership to the next generation during the parents’ lifetimes can make sense for tax planning or long-term care planning reasons.  As Congress debates estate tax changes that could reduce the federal estate tax exemption, lifetime gifts of vacation homes are something that should be considered, balancing the capital gain tax and control implications of such a gift against the estate tax cost of retaining ownership until death.

Thoughtful and timely planning for a vacation property can ensure the property will pass to future generations in a way that will minimize issues and maximize the chances the property will be enjoyed by your family for generations to come.  If you have a vision of your descendants enjoying your beloved cottage and building memories there, take the necessary steps now to make your wishes a reality.  Failing to plan and simply hoping that your children will “figure it out” is the clearest path to family discord, which is the last thing you need on a relaxing family vacation.  

Maria Baler, Esq. is an estate planning and elder law attorney and partner at Samuel, Sayward & Baler LLC, a law firm based in Dedham. She is also a former director of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA), and the current President of the Board of Directors of the Massachusetts Forum of Estate Planning Attorneys. For more information, visit www.ssbllc.com or call (781) 461-1020. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney.

July, 2021

© 2021 Samuel, Sayward & Baler LLC

Bless Your Family by Making Plans for your Beloved Vacation Home

by

Summer is finally here, and you may have plans to spend time at your vacation home with family and friends.  If you own a vacation home or are considering purchasing one, it is wise to create a plan for keeping the home in the family at your death or selling it if associated costs become unaffordable.  There are a number of options for keeping vacation homes in the family such as gifting a vacation home or putting a vacation home in a Trust or an entity.  Below is a short list with the upsides and downsides.

Wills. Individuals can distribute property they own in their individual names to the people whom they choose upon their deaths via their Wills. However, assets transferred under a Will must go through the public probate court process, which can be time-consuming and expensive.  Probate avoidance is a great gift you can give to your family.

Gifting.  Individuals can make gifts of vacation homes during their lifetimes.  The property would avoid probate and be removed from the individual’s taxable estate, thereby avoiding estate tax on the property. Many people consider gifting a house to avoid paying estate tax.  However, on the downside, the donor gives up control of the asset, and the asset is subject to the reach of the creditors of the donees who receive the property.  Also, the donee’s tax basis in the property would be “carryover basis”.  Tax basis is used to calculate the tax payable upon the sale of property.  Individuals who receive gifts of property have a basis in the property that equals the price the donor paid for the property.  If an individual inherits property at a person’s death, the basis in the property will “step up” to the value of the property at the time of death.

An important consequence of gifts made during life and after death is the basis of property.  If a parent purchases property for $500,000 and transfers it to children during life, then the children will have the same basis as the parent ($500,000).  If the children sell the property for $1 million, the children will pay tax on gain in the amount of $500,000 (the difference between the $1 million sale price and the $500,000 tax basis).

However, if the parent dies owning property worth $1 million and leaves the property to his or her children, the children will have a stepped-up basis in the property of $1 million.  If the children sell the property upon the parent’s death, no gain will result.  The children will not pay income tax upon selling the property.  However, the property will be includable in the parent’s estate and subject to the estate tax.  The Massachusetts estate tax rate ranges from 4.6% to 16%.  Combined federal and Massachusetts capital gains rate can be 20% to 25%.  Thus, opting until death to pass property to children may be favorable for tax reasons.

Trusts.  Assets titled in trusts during a person’s lifetime avoid probate. This is one of the reasons for placing property in a trust. A person who creates a revocable living trust is the grantor.  Upon transferring title of an asset to a revocable trust, the grantor retains control of the asset and usually serves as Trustee of the trust and is the sole beneficiary of the trust during his or her lifetime.  The grantor can name a Trustee to manage assets in the trust for the remainder beneficiaries (i.e. those who will be the beneficiaries at the grantor’s death).  Trusts can be structured to provide creditor protection for property held in trust against a beneficiary’s creditors such as a divorcing spouse, tax liens and bankruptcy.  Property in this type of trust will get a step-up in basis at the death of the grantor.

Entities.  A limited liability company (LLC) or a family limited partnership (FLP) can own a home and transfer the ownership of a home to future generations. An LLC or FLP can provide rules for a home’s use and operation, limit ownership of the underlying property to family members and provide buyout terms so that an individual family member cannot force a sale of the property.  Payment of repairs, insurance and taxes can be outlined with family members paying into an account for cleaning and maintenance annually or paying costs for the time that they use the vacation home.

A vacation home is a great gift, and passing it on to your loved ones is a wonderful way to continue family traditions and promote family bonding. It is important to consider all of your estate planning options in relation to a vacation home. Make sure you have a plan in place to ensure your vacation home continues to be a blessing and does not become a curse.

June, 2019

© 2019 Samuel, Sayward & Baler LLC

Five Ideas to Consider when Leaving a Vacation Home to Heirs*

by

Sue_144pxWith full summer upon us, thoughts turn to vacationing.  Whether you love the mountains, the beach, or fishing on the lake, everyone wants to take time to recharge during the carefree days of summer.  Some people are fortunate enough to own a vacation retreat where family members are regularly invited to get away from it all.  Whether it’s a cabin in the woods or a waterfront mansion, passing this beloved property on to future generations in a way that is fair and likely to result in years of happy memory building by generations of family members is a challenge.  In fact, sometimes it is so challenging that the owners die without doing any planning for their vacation home, which can lead to serious conflicts among heirs.

Here are five ideas to consider when a vacation home is part of your estate.

  1. There’s no such thing as setting aside too much money to support the property.     One of the primary areas of discord among co-owners of vacation property is money.  When mom and dad bought the cabin, they factored in the costs of maintaining the property when making the decision to purchase it.  However, for heirs who inherit a percentage of a property, there was no such consideration.  It costs money to maintain the cabin, including paying taxes, insurance, utilities and repairs – and not all inheritors are of equal means.  If you have a vacation home you want to leave to multiple inheritors, plan to leave funds to pay for the upkeep of the property for at least a few years following your death.
  1. Involve the next generation in the planning. When planning for the future of your vacation home, talk to your children about your plans and encourage them to be honest with you. Although you dearly love spending time at the cottage, your children may not feel the same way and they may be reluctant to tell you for fear of hurting your feelings.  Even if your children also love the family vacation home, they may recognize that because of where they live or because of their personal financial circumstances, ownership of the property is just not realistic.  As painful as this may be for parents to hear, knowing who wants to keep the property and who has no interest in owning a second home is vital information in planning.
  1. Consider tax reduction strategies.  In some sad situations, the next generation would love to keep the vacation property, but the estate taxes payable at the parents’ deaths are so steep that they cannot afford to do so.  These days, it is not uncommon to find that the humble lakeside cottage purchased 30 years ago for short money is now worth $2 million or more.  If you are lucky enough to have one of those properties, consider undertaking planning to reduce the tax bite at your death.  Common planning techniques include granting a conservation easement, charitable planning with part of the property, or using a Qualified Personal Residence Trust (QPRT) or other gifting vehicle to reduce the tax value of the property in the parents’ estates.
  1. Transfer during lifetime or at death? Many vacation home owners intend to remain as the sole owners of the property during their lifetimes and leave the property to their heirs at their deaths.  They reason that by doing so, they remain as the sole decision makers and keep all of their options open: they could sell the property, rent it out, change their minds about who will inherit it, etc.  However, transferring ownership to the next generation during the parents’ lifetimes can be good tax planning (see #3 above) or a good way to protect the property from having to be sold to pay for a parent’s long-term care expenses.  Transferring interests to children during the parents’ lifetimes can also serve as a “practice-run” for management of the property.  The parents can tweak their vacation house plan to address issues that arise during their lifetimes while they are still around to do so.
  1. The devil is in the details, or who gets the week of July 4th? In most cases, a vacation home is a seasonal use property.  Even if the Cape house is winterized and can be used in February, not many seek out the beach in the dead of winter.  Whether it’s skiing or beaching, there are usually a limited number of “prime” weeks during which everyone wants to use the property.  Along with the money (see #1 above), deciding how to divvy up these weeks among the inheritors is a key element to planning for the vacation home. The challenge increases exponentially with the greater the number of people involved.  By putting a system in place, parents can reduce the friction that may arise among children with competing interests who are trying to work this out after mom and dad are gone.

If you have a vision of your descendants enjoying your beloved cottage and building memories there for generations to come, take the necessary steps now to make your wishes a reality.  Failing to plan and simply hoping that your children will “figure it out” is the clearest path to family discord.  An experienced estate planning attorney can help you craft a plan that will have your heirs lounging lakeside or speeding down the slopes for years to come.

* Special thanks to my friend and colleague Attorney Timothy Borchers whose work and guidance in the area of planning for the family vacation home has been invaluable to many of us.

Attorney Suzanne R. Sayward is certified as an Elder Law Attorney by the National Elder Law Foundation, a private organization whose standards for certification are not regulated by the Commonwealth of Massachusetts.  She is a partner with the Dedham firm of Samuel, Sayward & Baler LLC.  This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information visit www.ssbllc.com or call 781/461-1020. 

Wills • Trusts • Elder Law • Long-Term Care Planning • Estates

©2026 Samuel, Sayward & Baler LLP. All Rights Reserved. The information presented on this website should not be construed to provide legal advice, nor does it constitute the formation of an attorney/client relationship. Read the disclaimer.