What You Might Not Know About Passing on Your Cottage [Michigan]

Many of those in the Midwest, and possibly other parts of the country, have a goal of buying a vacation cottage up north to spend with their families. Children often gain fond memories of their days in these family cottages. But how do you pass on the property for the enjoyment of several family members without causing disputes?

If there is no settlement on timing and ownership interests, divisions within even the closest families can occur, including partitions of the property. Recent changes in Michigan’s property tax laws enable families to transfer ownership of family cottages to the next generation without incurring the steep increase in property taxes that would have resulted under prior law. Property taxes allocated to ownership can still be substantial, and transferring the cottage to a family member means they are now responsible for those taxes. These are not the only expenses, as maintenance and upkeep costs should also be factored into ownership of a cottage.

Disagreements may arise regarding whether other family members have an option or even an obligation to purchase the interest of a departing owner, and whether an interest can be transferred out of the direct family. If you’re in a cottage conflict, what can you do? Usually, the best solution involves an agreement between the family members that details the answers to these common issues

See Sara G. Lachman & Jonathan K. Beer, What You Might Not Know About Passing on Your Cottage, GRBJ.com, December 28, 2018.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.