Practice Areas

Family Cabin Law

The family cabin or lake house is more than a valuable family asset; it’s a tradition and a legacy to many Minnesota families. Frequently, clients come to my office asking how they can assure their cabin stays in the hands of family for years to come. There are generally two methods used: a cabin trust or a Limited Liability Company (“LLC”).

With either a ‘cabin trust’ or an LLC, the rules of the cabin can be set during the original owner’s life. There are some important considerations, such as who will pay the bills, who will make major decisions and who gets to use the cabin and when. Often, schedules are set in advance. Also, one scheduling option I also enjoy seeing is the “floating family time.” This is a time where any and all family members can use the cabin, creating a de facto family reunion every year, long after the original owners have been deceased.

Transferring Ownership Interest.  The most difficult matter on the cabin is the mechanism in which the interest(s) in the cabin will be transferred in the future.  Most of the cabn trusts or cabin LLCs I set up are for parents, however, in some cases it for children who receive the cabin on the death of parent or parents.  They want to know how they can keep the cabin only in their family, passing it down to descendants.  In either a trust or LLC, language is drafted whereby there are restrictions on transfer assuring the cabin remains a family cabin.

Often, my clients don’t want to tie the cabin down too far into the future.   They would like to see the cabin kept in the family.  Yet, they don’t want it to be an undue, unfair hardship or penalty for those children who may have already set up life far away or have no interest.

In these cases, I suggest to clients what I call a ‘consideration period’.  This is a period of time, generally recommended 3-5 years, in which beneficiaries of a cabin trust or LLC may not transfer their interest, except to the other beneficiaries.  Then, after the ‘consideration period’ runs it’s time, the beneficiary, if wishing to ‘cash in’ their cabin interest, must offer it at a price dictated by the Trust, to other interested beneficiaries first.  The price dictated by the Trust is often purposely a discounted price.  The reason here is that it highly motivates beneficiaries to purchase the interest of those beneficiaries wishing to leave.

I’ve laid out a few very specific possibilities for a Trust or LLC.  These are just a few of  the countless variations that can be drafted into a Trust.  The attorney looks to client(s) to see their particular goals.

What’s the difference between a Cabin Trust and a Cabin LLC?  Perhaps there are not too many clear differences.  The Trust is maybe more common to individuals than an LLC (Limited Liability Company). Probably the biggest difference is a Trust must end some time in the future, but it may be many years off, whereas an LLC has a perpetual existence.

Call our office today if you want to keep your cabin in the family. Contact Us

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