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1. Liability Protection.

If property is titled in your name, you are personally liable for any claims against the property. These claims could include injuries suffered from guests - or even trespassers. While property insurance is always the first line of defense, most policy limits average $300,000 in protection. That means that any claims that exceed your policy limit are your responsibility. Your personal assets are at risk - including your home and pension. A Cabin Trust uses a limited liability company to create a liability shield between your cabin and your remaining assets.

2. Avoid Probate.

Property left in your name at death must be probated in order to pass it to your children. This is a process that can take many months and cost thousands of dollars. It also allows for contests. You could avoid probate by signing a deed making your beneficiaries joint owners while you are alive. Unfortunately, this would result in a loss of a step-up in capital gain cost basis - which, with escalating property values, could cost your family far more then even the cost of probate. But a Cabin Trust avoids probate and the negative consequences of using a simple quit claim deed.

3. Solves Family Conflicts.

If your goal is to leave your cabin to your kids they are going to need a rule book. If not, the conflicts can begin as soon as you are gone. What if two families want to use the cabin Labor Day weekend? What if one won’t pay their share of the taxes, insurance and maintenance costs? Who is going to decide if the roof needs to be fixed? What if one child wants to sell their share to a non-relative? These are just a few of the problems that can arise. 

A Cabin Trust is a rule book to resolve these issues. There are various options that we can incorporate into your family’s Cabin Trust so the rules are set by you. Remember - even a family with 2 children who get along wonderfully can quickly turn into a room full of grandchildren and step-grandchildren who all look at your cabin with different motives.

4. Protection from Children’s Problems.

Divorce. Bankruptcy. Spendthrift children. An heir with a disability or special needs. A lawsuit against one child. These are all issues that drag your property in the mess that others created. A Cabin Trust protects against these issues. 

5. Limits Tax Increases.

Changes in ownership from one generation to the next can result in a large jump in property taxes. Second properties already are far more heavily taxed because they don’t have the Michigan homestead exemption. Additionally, when property is retitled by a deed, will or living trust to your children, the Headlee cap is removed for 1 year, and the local treasurer raises your taxable value (capped value) to your state equalized value (SEV). This can result in a large and immediate property tax hike. In contrast, a property kept in a Cabin Trust avoids this increase.

6. Protection from Nursing Home Costs.

One of three people end up needing assisted care in an institutional setting at some point in their lives. A prolonged stay in a nursing home can quickly erase a lifetime of savings. While a primary residence is currently protected from long term care costs in Michigan, a second property is not. It must be sold to help pay for these costs if you seek assistance for your care. A Cabin Trust is designed to protect against this scenario - even with the newest Medicare rules enacted in 2006. Property in the Cabin Trust is not countable against nursing home costs, provided it is done sufficiently in advance of this need.

7. Saves Money.

Probate can cost thousands of dollars. Tax increases can cost even more. A lawsuit could cost you the entire value of your recreational property. The mistakes a child makes could likewise have a huge cost. A nursing home stay could put your property at risk. A conflict within a family costs more than money. A Cabin Trust was designed to avoid these costs. For the price of about a year of homeowners insurance, you can lessen or eliminate these costs for generations to come.

8. Creates a Family Legacy.

Stop for a moment and forget about all the problems, conflicts and costs detailed in the last seven paragraphs -- and refocus. You bought your cabin because you wanted a place to go to create family memories. Fishing, snowmobiling, hunting, and walks in the woods have been been a part of our up north tradition - not to mention Friday afternoon traffic on I-75! Most families have spent some of the happiest moments of their lives together up north. In the last decade, property values have jumped significantly. That is great for those of us who already own property in northern Michigan. But it also means that values are so high that many people in the next generation simply won’t be able to afford a place of their own. A Cabin Trust can create a family legacy. This rule book allows the continued use and enjoyment of your place up north for generations to come - customized for your family. This can be a legacy to be proud of.

Property in the Cabin Trust is not countable against nursing home costs, provided it is done sufficiently in advance of this need.