There are not many things as Minnesotan as “a weekend up north at the cabin.” I am originally from Iowa, but shortly after moving to Minnesota in 2006 I learned that Minnesotans live for weekends on “the lake” (whichever one of the 10,000 they have staked a claim on!), and that these “cabins” are often more of a lake home than a cabin. For example, in Iowa, if someone invites you to their “cabin” for the weekend, you pack mosquito netting and prepare for no running water – that is not so much the case in Minnesota!
What I found most interesting however was that for many individuals the value of the cabin is not primarily monetary. Lake cabins carry significant emotional value and sentiment for many families in Minnesota. Children grow up spending majorities of summers there, and family memories are made and relived. Such cabins and lake properties are often important for individuals to preserve for current and future generations.
When planning for cabin succession, it is not uncommon for older generations to be concerned that joint ownership could cause disagreements among the beneficiaries. Where numerous individuals have joint ownership of a property, disputes can arise regarding costs and maintenance responsibilities. From these disputes, relationships may be damaged or the cabin could fall in disrepair.
Rather than passing on ownership and splitting it among beneficiaries, a trust can be created to hold title of the cabin and fund costs of maintenance and ownership. By creating a cabin trust, a trustee is named to make decisions, guided by the terms spelled out in the trust. By having the terms set, disagreements may be avoided. Further, funding of cabin costs allows for beneficiaries to enjoy the cabin and maintain it.
It is also possible to set up a limited liability corporation (LLC). By doing this, an operating agreement is established that spells out the terms and rules, and any cabin-related decisions must be made by majority vote. This arrangement also provides additional liability protection to the beneficiaries named than that afforded by a trust.
Both a specialized Cabin Trust and an LLC are able to address issues such as maintenance responsibility division, family usage, and penalties for non-compliance with terms and rules. However, when it comes to which method is best, your goals and wishes play an important role in determining which should be used. Each method of planning for your lake cabin property has its own advantages and challenges.
Schromen Law, LLC recognizes the importance of the family lake cabin. I work with individuals and families to effectively pass lake property on through generations, so that memories can continue to be built, and many weekends enjoyed, up north at the cabin.
The material contained herein is for informational purposes only, and is not intended to create or constitute an attorney-client relationship between Schromen Law, LLC and the reader. The information contained herein is not offered as legal advice and should not be construed as legal advice.