For many Minnesota families, the family cabin is the physical epicenter of family memories. Invariably, we hear our clients say that they “want to spend more time at the lake!” For good reason, many of our clients have specific desires for how the family cabin should be transferred to the next generation.
While we are glad to assist these families achieve their designs for the transfer of the family cabin, no two family situations are alike. We carefully review the family objectives and finances, and propose a legal structure to achieve these objectives. In creating a plan for the transfer of the cabin, the family should give careful consideration to the following issues:
- Expenses. Should expenses be allocated based upon use or proportionately by ownership?
- Improvements. Should unanimous agreement be required of all owners for improvements or substantial repairs (e.g., the new roof or septic system), or should a majority vote govern?
- Liquidity. Will the existing owners create a pool of liquid assets to pay for expenses and/or improvements? How will arrangements be made for the contribution of additional expenses following the depletion of this pool of assets?
- Buy-Sell Provisions. When an owner wants to sell his or her interest, should the remaining owners be required to purchase that interest in order to avoid a potential sale to a third party, or must the owner who desires to get out of the property wait until one or more “remaining” owners purchase the property?
- Termination Provisions: Should the entity terminate when a majority of the owners decide to sell the property, or is the entity terminated only once all of the owners agree to sell the property?