If you are considering purchasing a family vacation home, and want the home to stay in your family even after you pass away, you need to take into consideration how estate laws work based on the location of your vacation home before you purchase it.
Out-Of-State Vacation Homes
One of the most important estate planning issues you need to think about when planning to purchase a vacation home is the location of the home. If you purchase a home in a different state than where you primarily live, the person who executes your will may have to go through a second additional probate hearing regarding the property. When you own property outside of your primary resident state or your domiciliary state, the other state where your property is held is referred to as an ancillary state. Most states require a second probate hearing in the ancillary state where the property is located in addition to the probate hearing in your primary, or domiciliary, state.
It is generally easier and simpler to pass on a home to your children or other family members when your vacation home is in the same state as your primary residence.
If you choose to purchase a vacation home in another state, you can make the inheritance process easier on your family by carefully establishing ownership of the vacation home from the beginning. You can put additional family members on the title of the home and give them rights of survivorship so that the ownership of the home falls entirely on them when you pass away. Or you can set up a trust and provide ownership rights to the home to your family through a trust instead. Both of these methods should prevent your family from having to go through a second probate process to take ownership of the family vacation home when you pass away.
Out-of-Country Vacation Homes
If you want to purchase a home in another country, it is vital that you work with an estate planning lawyer in the United States and an estate lawyer in the country where you are purchasing the property. Each country has their own laws and rules about property inheritance, which can vary from those in the United States. Before you purchase a vacation home in another country, you need to look into their inheritance laws and make sure that they line up with your long-term vision for your vacation home.
It is also important to keep in mind that just because your vacation home is located in another country, it is still subject to U.S. estate taxes; your family would have to pay those taxes upon inheriting the property. Additionally, depending on where in the world the home was located, they may also have to pay either estate or inheritance taxes associated with that country as well. Make sure that any estate plans you draw up take these taxes into consideration; you would not want your family to lose out on inheriting your vacation home due to tax issues.
Before you purchase a family vacation home, sit down and discuss how to set up the title and rights of ownership with your estate planning lawyer in the event of your death. Although passing on the property may not be on the forefront of your mind when shopping for a vacation home, planning for that from the beginning is a smart choice. Contact a firm like Law Office of Richard D. Saba, P.A. for more information.