Choosing the right cabin trust attorney to draft and execute a cabin trust for your family’s cabin can have repercussions in your family for decades to come. Consider this: most attorneys, including the vast majority of estate planning attorneys, have never drafted a single cabin trust.
Most attorneys that specialize in estate planning are concerned primarily with the efficient transfer of your assets to the next generation. There is nothing wrong with this focus. That is what the majority of our clients pay us to do.
However, in my opinion, trust and estate attorneys often miss what I think should be the vocation of any estate attorney: to preserve family relationships AFTER your assets pass to the next generation.
What do I mean? Any skilled estate attorney can efficiently plan to pass your assets to the next generation while minimizing estate taxes and eliminating the need to probate the estate. However, not enough of us ask the most important question. How will their kids relate to each other after the parents are gone?
Now, let’s consider the family cabin as it relates to this question. An estate attorney concerned primarily with the efficient transfer of your assets to the next generation will view the cabin in the same manner as they view all other assets.
In most cases, the attorney will draft a plan that leaves all assets you own to the next generation in equal shares. And without further consideration or counsel, the client will see their wishes fulfilled.
The client wanted to minimize estate taxes, avoid probate, and have an equal distribution of their assets to the children. For the average estate attorney, he/she will view their job as complete and the client walks away happy. Or so they think…
The client will never know of the disaster that awaits the family as a result of this plan. In this plan, all assets were passed to the children in equal shares and for most assets this is a fine distribution scheme. However, when a family cabin is involved, it is the rule and not the exception that the children’s relationships will be forever changed.
The family cabin is a special, almost sacred place for a family. And leaving this special asset to the children as equal owners will cause serious rifts among the children left behind. The arguments WILL start shortly after the parents pass away.
Typically, one child who doesn’t use the cabin as often as the others will propose a sale. The children who do still use the cabin will protest and the first of many fights will begin. And I must warn you that these are not small fights. These are the fights that last a lifetime. Don’t believe me? Let me prove it to you with the following story:
Let’s say for example that the family cabin is left to three adult children in equal shares, just as the parents wanted (or at least thought they wanted). The oldest child, we will call him Joe, has always loved the cabin and Joe spends most weekends there, fishing with his family. He is very grateful his parents left his family this wonderful legacy.
The middle son, Rob, also loves the cabin and would use it more frequently but there is a problem. Joe is at the cabin virtually every weekend and although Joe invites Rob and his wife and kids to join him up there, the truth is, Rob’s wife doesn’t care for Joe and his wife.
They get along in social settings but the idea of spending an entire weekend with them is an exhausting proposition for Rob’s wife. Rob’s wife is no shrinking violet either and pressures Rob to tell his brother that it is only fair that they be able to use the cabin alone.
Rob after weeks of agonizing, finally asks Joe if he would reserve a few weeks for his family and not visit the cabin those weeks. Joe is really hurt by this.
Forget for a moment whether he should be or not, the truth is Joe thought that mom and dad would want the kids to enjoy the cabin together. After all, that is what they did as kids and moreover, that must have been the reason mom and dad left the cabin to all of them.
Joe tells Rob that he will continue to use the cabin as he wishes and hopes that Rob and his family will join them. Rob is furious and worries what his wife is going to think, or worse, tell Joe what she thinks.
Joe and Rob’s sister Lucy, who lives in Seattle with her husband, have intended to go to the cabin but really can’t get away. They have been having a number of discussions lately about their finances and things are not looking great. They know that cabin is worth $600K and they could really use the money.
They ask Joe and Rob to consider buying her out. However, Rob and Joe tell her it is impossible. They can’t afford to do that. They remind her that no one told her to move to Seattle and she is welcome to visit the cabin any time and she should send a check for her share of the taxes as soon as possible because they are past due.
Lucy is angry and upset. She feels that her parents left the cabin to all of them, but the truth is only her brothers get to use it and she can’t even get her share of the inheritance out of the cabin. Moreover, she feels as though she is subsidizing their inheritance. It just doesn’t seem right.
Now, let me ask you…who is the bad guy here? Is it Joe, Rob and his wife, or even Lucy? This is, of course, a rhetorical question because, as you can see, there are no bad guys in this story.
Joe is using the cabin the way his parents intended. Rob and his wife should be able to enjoy the cabin too. And Lucy feels cheated. Can something like this be resolved?
You should know this is not a fictional story. It is a real life example of an estate plan that appeared to accomplish the client’s goals but, in reality, went very wrong. It went wrong because the attorney did not consider the future family consequences of the plan.
If the attorney was concerned about the children’s ongoing relationships, would he/she have proposed this plan? The truth is, if the parents were correctly counseled as to the consequences of this plan, they would have come to the conclusion that no asset, including the family cabin, is worth the children fighting over.
This problem could have been easily prevented. They should have either forced the sale of the cabin through the parents Wills or drafted a Cabin Trust or LLC that lays out the parameters of the cabin’s use, equity, taxes, expenses, and buy-out provisions.
If it is truly important to the parents that the cabin be shared by the children, then the estate attorney must work with the parents to craft the right estate plan. They need an estate plan that not only efficiently transfers their assets to the next generation, but preserves and even strengthens their children’s ongoing relationships.