Estate Planning for the Vacation HomeTax Professionals' Resource
October 18, 2013 — 1,701 views
A vacation home is a great idea of a person who loves to travel. Owning a home is a great feeling, but owning two houses are definitely better than one. However, during the past few years there has been a steady complication when it comes to buying such property due to the economic crises. There will be advisers that will tell you about the opportunities and pitfalls of making such an investment. The clients will be grateful if there is such a system that will be followed during the course of the transaction.
Name on the Title
The first step towards effective real estate planning is to find out who wants to get the name on the title. The title ownership passes to the spouse on the death of the person whose name has the title on it. With regard to the client buying the piece of property with the co-investors that is other than the spouse, it becomes necessary to work it out. This is in the case whether it is being held with the rights of survivorship or as the tenants. With regard to the rights of survivorship, the remaining co-workers have direct access to inherit the share of the decedent.
If the Vacation Home is in a Different State
Buyers of the vacation homes in a different state must be careful when it comes to holding the title. There are two different states that all real estate agents should know – ancillary and domiciliary states. Ancillary states are all the states other than where you live, which is known as a domiciliary state. If the owner of the title of a vacation home the ancillary state suddenly passes away, the estate and the tangible property are required to go through another probate proceeding by the executors in the same state.
If the Vacation Home is in a Different Country
There are many advantages of owning a vacation home in a different country as you can have much more fruitful and enjoyable experience whenever you visit it. However, there are considerations that have to be made when this is the case. The first that you will have to keep in mind is that there are different rules and laws with regard to the real estate ownership in that other country. It is safe for the person who is buying the vacation home in another country to hire legal counsel or experts to handle the transaction. This is because they are more equipped to deal with the different aspects such as tax and inheritance laws that may be present in that country.
Renting out Your Vacation Home
One of the things that should be kept in mind when you are renting out your vacation home is to make sure that you hold the property in such a manner that it reduces the amount of personal liability if there is a claim against the owner. The liability of the owner is, however, limited even if the person is a member of a limited liability company or is a limited partner. This means that although there might be a successful suit by the renter against the owner, the liability does not extend to personal property.