How to Successfully Pass Down the Family Vacation Home
Successfully passing down a family vacation home requires careful estate planning to accommodate your children’s differing lifestyles, needs and tastes.
Here are steps to ensure your vacation home remains a cherished family asset:
1. Start with Open Communication
Engage in a candid conversation with your children and their partners or spouses. Share your vision for the vacation home’s future and assess their enthusiasm and commitment to your plans.
2. Evaluate Selling the Home
Conduct a cost-benefit analysis of keeping the vacation home, considering maintenance, repairs and renovations. Weigh emotional costs and benefits. Selling the home can occur during your lifetime or at your death.
3. Establish a Trust
Place the home in a trust, allowing it to be sold after a specific timeframe or upon a majority decision by your descendants. Draft a trust agreement naming a trustee and providing liquid assets for maintenance, along with an operating agreement among heirs to guide the home’s use and potential sale.
4. Drafting a Flexible Trust Agreement
Choose an independent, professional trustee to care for the house, especially if the trust spans multiple generations. Ensure the trust has funds for maintenance and repairs, including taxes. Specify conditions for transferring ownership, if desired, and consider stipulations for buying out interests or selling shares to non-family members.
5. Use a Non-Binding Letter of Wishes
Instead of detailed instructions, provide a letter of wishes to convey your values and intentions. This can be updated as circumstances change.
6. Create an Operating Agreement
Develop an operating agreement detailing the home’s management, agreed upon by all children. Address issues such as:
o Time Allocation: Distribute time at the property, including holiday weekends, among family members.
o Other Uses: Define guidelines for charity events, family weddings, hosting non-family guests and renting the property.
o Maintenance Responsibilities: Assign tasks like opening and closing the home for the season, inspections and winterization. Consider hiring a third-party property manager.
o Renovations: Address generational divides over updates, ensuring agreement on renovation plans.
o Substantial Damage: Determine responsibility for damage beyond normal wear and tear, whether covered by the trust or the responsible family member.
Proper planning can mitigate potential disagreements and ensure the vacation home remains a source of joy and togetherness for your children and future generations. By addressing these considerations, you can help your family enjoy the vacation home to the fullest.
Rick Barragan is the Managing Director,
Los Angeles Market Manager, for
J.P. Morgan Private Bank.
[email protected] | (310) 860-3658
privatebank.jpmorgan.com/los-angeles
Source: “How to successfully pass down the family vacation home” by Anne Cutler, Head of Estate Disposition Advisory, Amy Richards, Senior Estate Disposition Advisor, May 20, 2025
