These are excerpts of an article in the Detroit Free Press by staff writer Shawn Windsor:
A wave of northern Michigan cottages, cabins and the occasional condominium is being passed to kids and grandkids. Many were bought for $10,000, $20,000, maybe $40,000, a generation or two ago.
Often, these places are emotional symbols of summer youth, where the inheritors first swam from one side of a dock to the other, rowed a boat or caught a bluegill. Now, they're worth hundreds of thousands of dollars, sometimes a million or more.
The 2000 U.S. census estimated that Michigan, with 235,371 second or vacation homes, ranks fourth among the states, behind only Florida, California and New York. In some northern Michigan counties, the numbers of cottages, cabins and other resort property is enormous. In Emmet, for instance, more than a quarter of all homes are not primary residences.
The responsibility of inheriting these properties can cause terrific friction, and families find themselves in probate court, fighting over shares, taxes, upkeep and who mows the grass.
The decisions come at a naturally stressful time, usually after one or both parents have died. The key to navigating it all, say estate lawyers and families who've gotten through it, is to plan. And to stick to the plan.
For families who keep the cottage, and must divide the time between many siblings, Linda Russell, a member of a family that shares a Michigan cabin, suggests having one member keep the schedule. That way, she said, weekends don't overlap.
"The problems come up when one or two siblings want to sell and the others don't," one Michigan probate court judge said.
The Russell family learned to agree on a time to leave and arrive. Everyone sticks to it. They learned to leave the cottage clean for the next family, to bring their own linens, to bring their own food, to leave a few beers in the basement fridge so each family has a few cold ones when their vacations begin.
Louis Russell had five children. Each of them and their extended families comprise the 200 or so who use it. One member from each of those families meets occasionally, much like a board of directors, to settle issues like increases in daily rent to cover taxes, upkeep and maintenance.
Louis Russell had five children. Each of them and their extended families comprise the 200 or so who use it. One member from each of those families meets occasionally, much like a board of directors, to settle issues like increases in daily rent to cover taxes, upkeep and maintenance.
Trusts or forging family limited partnerships are good things that allow families to iron out rules and financial decisions.
Many attorneys in metro Detroit, have seen an explosion in their estate business the last 10 years, particularly the World War II generation passing down Up North cottages to their baby boom kids.
Those kids are often spread out. In the Russell family, siblings come in from Minnesota, Washington and Arizona. Other families decide the trip back to Michigan isn't worth it and want to sell. Sometimes, though, families sell because property taxes are so steep.
Even though the cottages are usually paid off, taxes can still push tens of thousands of dollars a year. The Russell family pays $2,100 a year -- a relative bargain. "The problems come up when one or two siblings want to sell and the others don't," one Michigan probate court judge said.
In those cases, the ones who want to stay have to buy out their siblings and come up with a large chunk of cash. Getting a mortgage using the cottage's equity as down payment can solve the problem.
If the parents leaving the cottage set up a cabin trust before their death, then tax assessors don't always reassess the property when the children take over, saving thousands of dollars in taxes.
The other option -- limited liability corporation, or partnership -- allows inheritors to own shares of the cottage, which makes it easier to pass it along. The parents can also set up ironclad rules within this corporation to ease tension.
Many attorneys in metro Detroit, have seen an explosion in their estate business the last 10 years, particularly the World War II generation passing down Up North cottages to their baby boom kids.
Those kids are often spread out. In the Russell family, siblings come in from Minnesota, Washington and Arizona. Other families decide the trip back to Michigan isn't worth it and want to sell. Sometimes, though, families sell because property taxes are so steep.
Even though the cottages are usually paid off, taxes can still push tens of thousands of dollars a year. The Russell family pays $2,100 a year -- a relative bargain. "The problems come up when one or two siblings want to sell and the others don't," one Michigan probate court judge said.
In those cases, the ones who want to stay have to buy out their siblings and come up with a large chunk of cash. Getting a mortgage using the cottage's equity as down payment can solve the problem.
If the parents leaving the cottage set up a cabin trust before their death, then tax assessors don't always reassess the property when the children take over, saving thousands of dollars in taxes.
The other option -- limited liability corporation, or partnership -- allows inheritors to own shares of the cottage, which makes it easier to pass it along. The parents can also set up ironclad rules within this corporation to ease tension.
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