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Planning for Your Business or Vacation Property

Small Businesses, Rental Properties, Farms, and Vacation Property all have the potential to be the best or worst things that ever happened to a family. Our experienced attorneys help families and business owners protect what is most important to them regarding these assets, whether they are just starting out, buying or selling real property or a business, or planning a multi-generational succession plan for these properties. We help ensure that your goals regarding these unique assets have the best chance for success while minimizing risks, addressing potential conflicts and balancing income, estate and real property taxes.

Starting and running your own business can bring new and exciting freedoms along with some stressful uncertainty, all of which can be made better through proper planning and knowledge regarding the risks unique to the path you have chosen.  Any unknown risks can unnecessarily create anxiety, either your own or that of your family or employees.    Having a partner or two or nearing retirement age can sometimes add to that anxiety, too.

Our experienced business attorneys will help you chart the best course for you whether starting a new business, buying an existing business, managing operational legal issues, or planning for your business’s succession.

When warm weather is here, many families enjoy their family cottages, the sunshine, and lazy days. It is almost impossible to think that this won’t be how you, your children and grandchildren will spend every summer. Although the idea of sharing a family cottage seems like a simple process, the flow of life and death along with real estate and divorce laws could complicate your vision.

How you view the future of your family cottage may not match how your children or their spouses, view their “rights” to the family’ cottage. Children living out-of-state might not want any part of the cottage because they are not able to use it, they can’t afford it, or they simply want to “cash out their inheritance.” Worse yet, they might lose their portion of the cottage during a divorce. These situations can be avoided with a solid vacation property succession plan.

Cottage Planning Laws

Before Michigan created the Michigan Limited Liability Company Act (LLC), many families relied on partnerships, limited partnerships, joint ownership, or co-tenancy for the means of owning family cottages or other vacation property. Each of these forms of ownership have drawbacks to ownership that can now be addressed with a Michigan LLC coupled with other agreements that are utilized to minimize the risk of real estate property tax “uncapping” for as long as permissible by recently expanded laws.

Your Cottage Succession Plan will be structured to keep your current traditions in place while protecting and preserving your family cottage for future generations from massive property tax increases, disagreements, forced ownership changes, family members failing to pay their fair share of ownership costs, etc. Indirect ownership of the family cottage using the correct legal entity can also shield and protect the cottage owners from personal liability in the event a person is injured while at the cottage.

Cottage Sharing Is Not Easy

Below are several common concerns of those facing “cottage sharing” within their family:

  • The possibility that ownership of a part of the cottage will pass into the hands of a non-family member as a consequence of death or a divorce.
  • A family member wants to “cash out” his or her interest of the family cottage.
  • What to do if a family member is not able or not willing to meet any or all financial commitments to the cottage, such as maintenance cost, taxes, insurance, etc.
  • The financial impact on the cottage if a family owner files bankruptcy, or a portion of the cottage’s interest is levied by a creditor of a family member.
  • Disharmony and even possible litigation between siblings (or cousins) when parents are no longer around to mediate a peaceful resolution.
  • How to solve internal conflicts between family members about how the cottage is operated, maintained and improved.
  • What happens when a child or children cannot afford to keep the cottage.

Cottage Plan Consultation and Analysis

You have worked hard to have a special place for your family to go, and we want to help you preserve that investment for future generations. For further assistance in protecting and preserving your cottage, contact us for a free initial consultation to discuss the steps you have in place and whether they will accomplish the future plans you have for your family’s use of your cottage or other vacation property.

I get asked a lot, “how do I keep my business properties or rental properties in the family after I’m gone?” The best way to protect your business properties is to start your estate planning as soon as possible. Protect your rental property with these strategies.

Start with the information you have about your business, your assets, and your family. Start your plan now and as your business and family grow, keep updating it. The best estate plan isn’t formed in one setting, it is developed over a lifetime. What’s the worst thing you could do? Nothing. Not planning for your business properties is a sure way to leave a mess for your loved ones. I’m giving you some strategies to help you start your plan, and to ensure it is as thorough as possible.

If you have a family business or a rental property that you want to keep in the family, or if you just want to avoid leaving a mess behind for them, give us a call at the number below to schedule a strategy session with one of our attorneys who can help you work through the process of making sure that your intentions are carried out, management’s intentions are carried out, and that the business that you’ve spent so long building up creates a nest egg for your family instead of a nightmare.

How do I make sure that my lake house or family cottage stays in my family after I’m gone? I’ve been working with families for over 20 years answering this very question, and the one thing that comes up time and time again is that there isn’t a best way. There’s the best way for your family and for that property but there is no one perfect, ‘right way to go about it. There are three things we need to consider when setting up your plan for your vacation home.

First, the value. We understand that the value of your cottage or lake home isn’t the number on the piece of paper. There are potentially generations of memories you want to pass on to the next generation. In Michigan, the value of the cottage oftentimes gets capped for tax purposes. it’s very important that you have a very thought-out management team and management succession process for your cottage. You don’t want your cottage to end up being managed by your sister’s cousin’s sons.

The next thing I want you to consider is how is the cottage going to be used? And also, how does everything get paid for this cottage? The best thing to do is have an endowment fund that will produce enough income to pay for everything. That makes it a whole lot easier for everyone else, and that’s the best way for your estate plan to actually work with a cottage or lake house in it.

If you have a cottage or lake house in your family, and you want to make sure that it transfers to the next generation successfully, give us a call today to schedule a strategy session with one of our attorneys to make sure that the plan you put in place actually works.

If you live in Michigan or just have real estate here, you are likely subject to Michigan real estate transfer taxes and are potentially subject to “uncapping” as the result of Proposal A and subsequent legislation.  Laws around real estate tax are complex, and it can be difficult to keep up.  Read on to learn the basics of Michigan real estate taxes as of this year (it changes pretty regularly).

Annual increases to the taxable value of a property are “capped” at 5% or the rate of inflation, whichever is less.  The cap on the taxable value of the property is removed or uncapped when a transfer of property ownership occurs, and the state equalized value (SEV) of the property becomes the new taxable value.

Michigan law generally allows exceptions to the uncapping rules for certain residential property transfers. These exceptions allow property owners to make certain property transfers to certain family members without uncapping the property taxes.

Accidentally triggering a property’s “uncapping” by failing to understand Michigan’s property tax rules could be a costly planning mistake for families with high-value properties or properties that have significantly increased in value, such as lakefront and other vacation properties that you plan to keep in the family. Attorney Shawn Eyestone speaks briefly about the general concerns of keeping these properties in the family, including the need to keep the property taxes as low as possible.

Real estate tax is complicated. Questions? We can answer them. Contact us today!

Or call us at 800-667-5291.

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1

Free Consultation

Schedule a Free Initial Infinite Legacy Planning Session to discuss your goals and create an action plan for protection for your family or for your business.

2

Information Gathering

Complete and return the questionnaire and bring the related documents to your Infinite Legacy Planning Session.

3

Design

We will work with you to design and create a comprehensive Infinite Legacy Plan to implement the action plan designed for your family or business.

4

Legacy Creation

We will meet with you, your advisors, and your family on a regular basis to ensure that your plan is understood, up to date, and carried out.

Grand Rapids Area Office

3083 Washington Ave, Suite A
Grandville, MI 49418
#616-777-5291
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Muskegon Area Office

800 East Ellis Road, #511
Muskegon, MI 49441
#231-683-1000
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