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Minnesota Cabin Trusts – Who Gets the Family Cabin?

On Behalf of | Feb 21, 2019 | blogs

Minnesota is the land of 10,000 lakes, as they say, and around those lakes is probably 10 times that amount in family cabins. From small fishing shacks to luxurious modern cabins, Minnesotans live for weekends up at the cabin, and they can be a great place to build happy family memories. Unfortunately, all those happy family memories tend to get in the way when the first generation passes away and the next generation can’t decide on what should happen with the family cabin.

In Minnesota, disputes over the family cabin can be even more contentious than disputes over the family home. Some may want to sell for a huge profit, other may want to keep it, but no one can decide on who wants to do the maintenance work. However, these disputes usually end only one way – the courts are forced to divide the cabin and everyone has to sell off their section. In order to prevent these arguments and heartache, you could consider establishing a cabin trust as part of your estate plan to prevent these family-ending arguments after you pass.

How A Cabin Trust Helps The Family

A cabin trust functions much like any other kind of trust. The cabin and select funds are placed inside of a trust. The trust is then managed by a trustee that makes decisions for the trust based on the guidelines left by the creator. The extra funds placed in a cabin trust go towards all the expenses and maintenance such as insurance, property taxes, and actual physical maintenance that it requires.

The terms set by this cabin trust can control anything from who gets to use it, when they get to use it, and what happens to those that do not comply with the terms. However, it has the benefit of being able to be changed when the creator of the trust is alive, but the distinct disadvantage of being very inflexible when the creator passes away. While this will make sure your family follows your wishes, it can make it difficult for your beneficiaries to make changes, even if they all agree to them.

LLC – A Cabin Trust Alternative

If a cabin trust doesn’t quite seem like the right choice for your family, you do have the alternative of placing the cabin in a Limited Liability Company (LLC). These companies are created and dictated by an operating agreement where cabin-related decisions are made by majority vote. The members of the LLC, in this case your beneficiaries, vote and decide on major issues like the sale of the cabin to even annual issues like how the expenses are divided and paid for. As decisions are made by majority rule voting, this allows more flexibility between the heirs.

Unfortunately, this flexibility cannot always be an advantage. For example, if there are three beneficiaries, and one wants to use annual funds for upkeep while two want to use them to install a hot tub, majority rule dictates that the cabin is getting a hot tub rather than the funds being used to pay the property tax.

Need Help?

Even if you believe you have a reasonably peaceful and rational family, that can all break down when a beloved pillar like a parent or grandparent passes away. Even if you aren’t worried that your children will fight over the family cabin, you should still consider estate planning around it just to make sure your family isn’t filled with extra and avoidable strife after you pass away. If you are starting the estate process in Minnesota, contact us today to see what the Hero, & Jacobsen Law Firm can do to help you.