Copyright 2008, Marc S. Weissman|
Certified Specialist: Estate Planning, Trust and Probate Law
Certified by the California Board of Legal Specialization of The State Bar of California
Weiss & Weissman, San Francisco, California
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This Article is designed to be of general interest. The specific techniques and information discussed may not apply to you. Before acting on any matter contained herein, you should consult with your personal legal adviser.
We have a vacation home and want to make sure it stays in the family. How can we do this?
The first option is a Qualified Personal Residence Trust. The QPRT creates discounts as the gift is delayed for a period of years. (The longer the time, the bigger the discount, but the giver must outlive the term selected.)
The next option is an Irrevocable Trust. That is for a current gift, with limitations or protections. This may be similar to the Dynasty Trust. For gifts to children, this qualifies for Prop 13 protection.
Another option is a Limited Partnership or LLC. This is effective for gift to grandchildren or other family members as the property tax protection for parent-child does not apply. With an LP/LLC, an annual tax return is required, as well as $800 per year California minimum tax.
Another option is what I call Direct Deeding, where a Parent deeds shares of a property directly to a Child, qualifying for Prop 13 protection. This must involve use of a signed Co-Ownership Agreement aka Tenancy In Common (TIC Agreement). Co-owned means tenants-in-common. (TIC) By law, ANY Tenant-in-Common may:
A TIC for personal use property like a vacation home will also require scheduling to ensure fair use by appropriate family members, and perhaps a dispute resolution system just in case. (Example: "If they cannot work it out, Uncle Fred is the Arbitrator").
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