The vacation home where you spent family time growing up holds many wonderful childhood memories. What’s next for that home? Some family members may have strong feelings about keeping the property and others may be okay with moving on. So what can you do now to preserve the family memories and avoid future conflicts?  

For many years, the generation that owns the property (typically your parents) has handled the upkeep and financial responsibilities. However, as time passes, the next generation (you) may need to decide, “what’s next.”

Desired Outcome

Before bringing other family members into the mix, the parents first need to decide if they want to hold, sell, or transition the property. Continuing to hold onto it or transitioning the property to the next generation will ensure more family memories. Still, the parents must determine if they need the liquidity a sale would provide. If transitioning it to the next generation is the goal, the owners should meet with all family members to determine who is interested in owning the home and willing to be involved. 

Even if the plan is to pass it to the next generation after the parents pass away, discussing that transition now can be very beneficial. The parents might assume that all the kids want to keep the home, but the kids may have different ideas. Remember to share the cost of expenses, such as property taxes, HOA fees, annual maintenance, and insurance.

If the plan is to transition the property, the next group of owners should create a plan to address communication, financial responsibilities, and usage. 

Communication is Critical

Good communication and understanding of financial obligations can reduce potential problems between second-generation owners. Unless the property can accommodate everyone at one time, there needs to be an agreement regarding who gets to use the property on holidays and how the school vacation months are divided. Have these discussions regularly and create a calendar everyone can reference. Don’t wait until July 1st to make it known you want to use the lake house for your 4th of July party! 

Many times, distance will not allow one owner to have the same access to the property as another. Or in some situations, one owner may prefer to have a vacation spot in a location offering different amenities and, consequently, rarely uses the inherited property. Talking through your family’s situation now can prevent frustrations down the road. 

Another major issue involves the cost of maintaining the vacation home. Again, making a fair agreement regarding payment of expenses based on who uses the property versus an equal split will help avoid money arguments. However, expenses that add to the home’s value, such as roof replacement, adding a room, or extensive landscaping, are acceptable expenses to be shared by all owners on an equal basis.

Owners may find themselves in different financial situations over time. Some may feel a financial pinch when putting children through college, saving for retirement, and funding vacation home expenses. The new/future owners need to determine how they will handle disparities if they arise. Look at average annual expenses for the last 3-5 years. You could handle expenses as they arise or have everyone contribute to an account that can be drawn upon as needs arise.     

Planning Considerations

First-generation owners should consider including the vacation property in their estate plan. Having the property owned equally by each of the children may or may not be appropriate. However, if it has become obvious that one child is more interested in owning the property, it would be more suitable for that child to inherit the vacation home and the other children to receive other assets of equal value. If the estate does not have sufficient assets to do this, the estate plan can allow the property to be owned equally by the children with the caveat that one child should have the opportunity to purchase the property from their siblings for fair value.  

The estate plan should always address the disposition of the property in the event of the death of the current owners. However, the first-generation owners may need to liquidate the property to improve their financial situation. This may include selling to children who are interested in maintaining the property. However, if the parents sell the property for more than what they have invested (purchase price + improvements), they’ll owe capital gains taxes. However, if the property is inherited, capital gains are not realized and the cost basis for the new owners is the appraised value as of the date of death. 

Another planning tool the new owners could implement is a buy-sell agreement. This agreement documents the terms of the sale if one of the owners passes away. In the absence of such an agreement, the surviving owner may find it necessary to work out details with the deceased owner’s children.


The best advice is for the first-generation owners to talk with family members about the property and find out who is interested in owning it after they are gone. You might be surprised!

The owners should also discuss their goals with an estate planning attorney and financial planner to ensure an appropriate plan is in place. Then, with forethought, open communication, and careful documentation, you’ll be better poised to accomplish your desires and maintain a close family relationship.

Sarah Mahaffa, CFPis a Sr. Wealth Advisor with Bedel Financial Consulting, Inc., a wealth management firm located in Indianapolis. For more information, visit their website at or email Sarah at

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