Family Legacy Property Entity

PSDBowhunter

Lil-Rokslider
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Feb 6, 2018
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159
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Trout Run, PA
Does anyone have experience with a Family Legacy Property that is passed down through the generations? If so, what entity owns the property? Is it in Trust, Family Limited Partnership, LLC, something else?

I've done a good amount of research and there are pros and cons to each. Does anyone have any first hand experience/advice?

We have a property in the mountains that is currently in my mom's name. We purchased it after my dad passed as a place for us to hunt and be together as a family. My desire is that is passes down through the generations to my kids some day and then their kids.

I know that passing things down through generations can be very difficult. I'm trying to lay the best foundation with how things are set up and then get them more and more involved as they grow older. Hopefully they want to use the property and care for it as much as I do.
 
Bigger issue is less about the entity and more about the kids having different priorities. One wants to use it the other wants the money. Toyed with ideas with our cabin and finally decided it was better for me to buy it while he was alive vs siblings inherit via any mechanism.

Even if keeping it was not contested or somehow protected from ever selling what happens when large sums are required for improvements or maintenance?

What if none of your great grand kids want to use it or cant afford taxes? Best you can do is make the best choice of the next owner, not much you can do past that.

If minimizing inheritance tax is the goal an attorney can advise you, varies by state.
 
I have a family cabin my grandfather bought. My father inherited because he was the only one to use it. My father passed away a couple years ago, and now my mom is passing it on to me. I have 5 siblings and I’m the only one to use it and put money into it. I plan to leave it to whichever one of boys actually uses it. From there it will be their decision. I can’t control the future.
I would rather it get sold and used versus causing a fight or financial hardship between family.
 
Rarely works out as described in the above posts. Have seen this with family properties, businesses. Always comes down to the money; to maintain, improve or someone wants their share out and others cant afford the buyout cost. Enjoy your assets in your lifetime, can’t predict the future.
 
I've seen this in my wife's family. Where no one wanted to make a call and the properties got split between the kids. Multiple entities on multiple properties.

Well fast forward a generation and one property that was left to 4 people now has 7. People pass away and leave it to their kids. Well none of them use it except my wife's dad and his brother. Me and my father in law are the only ones that work on it clearing dead trees, burning in late winter, planting food plots and generally keeping it nice.

None of the 4 kids that got added to it even care. They haven't set foot on the place in years. They want to sell their part but i don't even know how that would work legally since there are multiple individuals listed as owners. Without rewriting the paperwork, I feel that buying them out only adds me to the mess and increases ownership for the people who didn't get bought out without adding clear terms.

Either way, this is an example of what not to do. Make the hard decision and write it out clean and clear. I would set it up in a way where if someone wants out in the future they have to provide first right of refusal to the remaining party with reasonable terms. If the remaining party agrees to splitting and selling, they get first dibs at what they want to keep as long as it's fair.

If there are people you do not want to include, make that clear before you pass.

This is only one peoperty of about 8 that are associated with her family and they all share the same problems. I like to remind her this is what happens when 6 siblings grow up and live adjacent to each other their whole lives.
 
Friend has a family farm, one of the owners wanted out, her buyout demand was unreasonable, wouldnt negotiate. Went to litigation, judicial sale ordered. Other owners had to bid against other bidders known to be associated with the attorney for the woman. Family retained the property, now has land debt, woman after attorney fees ended up with less than the family’s offer. My brothers and I own a farm in an LLC created by our father, is on the market due to urban encroachment and our ages. We have 7 children among us, only my sons have any attachment to the property and they live out of state. The others would likely want money rather than ownership. We arrived at the decision to avoid future conflict. One of the children is a litigation attorney, another is married to an attorney, you know where things are headed. The LLC was created to avoid conflicts with first refusal language but you run up against the hard reality of the costs of ownership.
 
I own land that’s been in my family for 75 years. I bought some of it from estate at fair market value, inherited some, and horse traded for other parts to get other relatives off of the pieces I wanted control over. It’s been a constant effort on my part and I’ve had to forego other possible dreams in my life to make it happen.

There is nothing you can set up that is going to make things easy, unless you only have 1 child. Or, you have a situation where you have say 2 kids, one of them is a boy and grows up to love it like it’s his and puts down roots nearby and the other is a girl, doesn’t care about it, marries a finance guy and moves to some city. Even then you are going to have to say, leave the 1 kid the farm and leave the other $3M more dollars etc to make up for it, and make sure they are all on board with the “why” behind everything.
 
Thank you all for sharing your experiences. I definitely see how the family dynamics cause issues, especially in today's world with attorneys getting involved at the drop of a hat.

This property that is currently in my mom's name would be shared by myself and my two brothers. All of us our married and in our 30's, but I'm the only one that has kids. It sounds like we'll have to see how things play out. Our family is pretty close, and I'd like to keep it that way. Properties like this are a place to bring families together, however, I know priorities change over time and generations.

I was pretty spoiled growing up having a property that my great grandfather purchased that I was, and still am, able to hunt. It's still in the family, but most people just use the property for their summer vacation 1 weekend a year. The more people involved the more complicated it gets.
 
Partners are for square dancing and that’s it, I’ve seen this scenario multiple times and it never ends up good, own the land outright yourself or take the cash and buy a new piece, new memories can and will be made.
 
It’s what I do professionally, and it’s like divorce but with dead people and blood family.

I try to talk people out of ongoing trusts like this. The chance of success is maybe 0.5% and the chance of drama is 99.5%.
Yep. In theory it’s a nice idea but interests between siblings change and “who put in more effort, money, etc” has turned my favorite childhood place into an unpleasant environment to be around. It’s been really sad to experience and the magic of the place is gone. Trying to make sure my kids get to enjoy it as much as they can for now.

The sharing thing just doesn’t work for land from what I’ve seen.
 
Our legacy property is set up at a limited liability partnership and it’s worked out really well from what i can see for my family and outside shareholders. With bylaws, yearly dues, board of directors. the whole works.

Yes everyone bickers about little things like maintenance, what upgrades should be priority, things like that. But they have had it set up that way since the 1970’s. One shareholder is still an original investor, they are in their 90’s, and all other shareholders are into their second generation ( ages 55-80) and two are into the 3rd generation (ages 30-50). I can see the writing on the wall that a lot of the partners kids won’t make it past the 3rd and probably will be selling their interest to the other partners in the next 20 years give or take when their parents die. A handful of the kids will never be able to afford the yearly dues and a buyout will set them up for other endeavors. Hell, most of the 3rd generation never have set foot on the property into their adult years and that is sad to see. I see some major condensing happening in the future.

There is also advantages to gift equities and those conversations really would benefit being had with a CPA and an attorney. Revocable trust might be the way to go. But regardless have all the language spelled out with buy out clauses, first right of refusals, etc. all the things.


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Partners are for square dancing and that’s it, I’ve seen this scenario multiple times and it never ends up good, own the land outright yourself or take the cash and buy a new piece, new memories can and will be made.
My family cabin was originally set up in a trust with my family. I am the only one to use it, maintain it, and pay for everything with it and I was ready to walk away and buy a new place. There was no way I was going to continue to spend all my cash and time for an even split with everyone.
I told them I was looking to buy my own place and someone else would have to spend the money and time to take care of it . Before I found something they all changed their minds and it was left to me.
I have heard multiple horror stories of a property being split and it turning into a fight.
I did offer to purchase it also, but nobody wanted that. They just wanted it to stay in the family.
 
My family cabin was originally set up in a trust with my family. I am the only one to use it, maintain it, and pay for everything with it and I was ready to walk away and buy a new place. There was no way I was going to continue to spend all my cash and time for an even split with everyone.
I told them I was looking to buy my own place and someone else would have to spend the money and time to take care of it . Before I found something they all changed their minds and it was left to me.
I have heard multiple horror stories of a property being split and it turning into a fight.
I did offer to purchase it also, but nobody wanted that. They just wanted it to stay in the family.
You’re a blessed man, that’s exactly how families should get along, more of that is needed in today’s society, the world would be a better place!
 
I’ve seen this scenario play out poorly several times. Land, money, inheritance, just has a way of bringing out the worst in some people. My wife and I have the opposite problem. We own some land but we don’t have any children. I’m not sure what to do with it.
 
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