A vacation home can provide countless family memories over the years. When you start to envision your legacy, vacay property may be a part of it. In this post, we will provide some important information about estate planning and vacation homes.
Do Your Children Really Want the Home?
The thought of your children and their families enjoying quality time at the vacation home after you are gone may be heartwarming. At the same time, your children may have different ideas.
For example, let’s say that you have a house at the beach that is worth $2.5 million. Your children are not financially needy, but they are not wealthy. They are sending their own children to college, and the bills are considerable.
Under the circumstances, the liquidity may be far more attractive than the luxury of the vacation home that will rarely be used. Plus, all families are not perfectly harmonious. It can be complicated for some siblings to divide their respective ownership interests.
We are just providing some food for thought. There are vacation homes that have been in families for generations, and this is a beautiful thing. However, there is a big picture to take into consideration when you are planning your estate.
Beware Of Estate Taxes
Valuable property can be subject to estate taxes. There is a federal estate tax with a 40 percent maximum rate. It is applicable on the portion of an estate that exceeds the exclusion. In 2022, the federal estate tax exclusion is $12.06 million.
You would logically consider lifetime gift giving to get around the estate tax. People used to do this shortly after the estate tax was enacted in 1916. However, since 1932, there has been a gift tax in place continuously. It is unified with the federal estate tax.
As a result, the $12.06 million exclusion includes large lifetime gifts along with your estate.
Here in Connecticut where we practice, there is a state-level estate tax with a contact form on this site you can use to send us a message.
Mr. Nirenstein is licensed to practice before the courts of the State of Connecticut and the United States District Court. He is a member of the Connecticut and Hartford County Bar Associations, and the Estate and Probate, Elder Law, Business Law and Real Estate Sections of the Connecticut Bar Association.
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