Insights: Series 1

Leaving Real Estate to Multiple Children

Proper estate planning is key to avoiding future problems between your children, especially when you leave them your home or cottage.

With its seemingly endless summer days, charming towns, and abundant natural resources, northern Michigan is a popular location to own a seasonal home, condo or cottage.

Properties like these are enjoyed by many families and their friends during summer vacations, holidays, special occasions, and quick weekend getaways. They are where memories are made.

And as a parent who may have the good fortune of owning one, you’re likely planning to leave it to your children upon your passing.

But what happens when you have multiple children who you intend to inherit your property together, equally? How do you avoid conflicts between them and ensure there’s no arguments?

Whether you’ve already planned your estate, or you’re just getting started, it’s important to consider all the potential and unintended consequences of leaving your up north home to multiple children.

Children as Equal Beneficiaries

When you plan your estate, one of the first decisions you’ll make is naming its beneficiaries. A beneficiary is someone (or an entity) who you designate to receive your property as inheritance.

Normally, parents will name their surviving children as their estate’s beneficiaries and sometimes outline the division of their assets among them.

But when an estate includes a large asset such as a home or cottage, parents may name all of their children as equal beneficiaries. And by doing so, it makes each of them equal owners of the property.

Family Dynamics

Leaving real estate to your children as equal beneficiaries can, and often does, introduce complications to estate planning. Beyond the legal, financial, and more technical details, family dynamics always play a very big role in how it all plays out in the realities of a beneficiary’s life.

Any experienced estate planner, or parent for that matter, will readily concede that sibling relationships can be both complicated and hard to decipher. This can be true even for the closest of families.

To underscore this point, we consulted with expert estate planner and trust attorney Bob Boesiger who offered more perspective.

In his 30-year career helping families in Harbor Springs and metro Detroit, when it comes to real estate inheritance, he’s yet to encounter perfectly cooperative siblings.

“Every parent truly believes that all of their children are best friends and have the same goals, objectives and desires. But in reality, this is never true.”

Due to varying reasons, when compared to reality, parents often have a different understanding of their children’s relationships with each other.

These discrepancies are not hard to imagine, especially if your children have established lives far from home, or you only see them interact together during rare or infrequent family gatherings.

But there are ways to get around these difficulties and better understand the differences between your sons and daughters. This starts with considering many of the potentially uncomfortable realities of your children’s lives.

Common Problems

Even the most well-planned family estates can cause problems between children once the parents pass away. And when estates include a home or cottage in northern Michigan, these issues can become greatly amplified.

Unfortunately, despite a parent’s best intensions, it’s not uncommon to discover or experience one or more of the following situations.

Affordability Differences

You should consider whether there is any significant difference between each of your children’s ability to afford your property once they’ve inherited it. As an example, depending on how your property is conveyed, the property taxes can increase significantly. If one of your children can afford the increase, but another cannot, it could lead to stressful negotiations between them, potentially forcing an unwanted sale of the property or worse.

“If the property is not passed in a trust structure with guidance on ownership as well as financial assets from the parents’ estate or life insurance, arguments generally ensue,” says Bob Boesiger, Managing Director of UHY Estate Strategies and Trust Group. “And the vast majority of the time the asset is sold.”

The owner of Cornerstone CPA Solutions in Harbor Springs and Petoskey, Greg Bennett, agrees with Boesiger’s assessment, but he adds further caution.

“Siblings often do not have similar financial means and one often ends up having to buy out the others or they have to sell the property. That frequently results in family issues and even advancing to legal matters when they cannot agree on terms.”

Ability to Maintain the Property

Maintenance requirements for homes and cottages in northern Michigan can be quite different than those in other parts of the state or country. The winters here can be severe and critters can cause a lot of damage to properties that are left unattended for long periods.

Will one or both of your children be able to handle these responsibilities if they live far away? What happens when one child isn’t contributing or refuses to compensate the others who pay for maintenance expenses?

Emotional Attachment to the Property

The possibility could exist that you may have a much bigger emotional attachment to your home or cottage than do your children. And each of your children’s level of attachment can vary widely between them. You might even be surprised if there is no attachment at all, or differing attitudes at the very least. Knowing this information can help you make better decisions with your estate before it’s too late.

“The most common misconception surrounding cottages and second homes is that the parents believe their children have the same emotional attachment to the property as they do,” says Boesiger.

Level of Interest in the Property

Similar to emotional attachment, you should gauge the interest each of your children may have in owning your property at all. The differences and similarities between each of your children’s desires could influence what you do with your property both during your lifetime and after your death.

Unrealistic Expectations

Even in situations where children have expressed interest in inheriting your property, their wishes may not be very realistic.

Owning a vacation home in northern Michigan comes with unique responsibilities and challenges. So it’s important for your children to understand that owning property here is not at all like owning property in a big city or suburb.

While northern Michigan is a highly desirable place to live and visit, many things are comparatively more expensive. Property taxes, for example, especially for non-primary residences, can be shocking high to many.

“I have several friends and clients who regularly compare the expense of vacation home ownership between northern Michigan and other states,” says local realtor and real estate advisor Jeff Kazmierski. “It’s very common that their taxes and dues are much less in Florida, for example, even for larger and more luxurious homes than those they own in Petoskey, Bay Harbor, or Harbor Springs.”

It’s also important to remember that northern Michigan as a whole is a rural area. Services can be difficult to find and coordinate, and some goods harder to source, especially when time isn’t on your side. It’s not to say life is more difficult up north, but it can often be less convenient and require more self reliance than some or all of your children may be used to.


There’s also generational lifestyle differences that need to be considered.

“Baby Boomers, for example, have had a habit of increasing the size of their residence with age and second, third, fourth homes with the idea of allowing their kids to inherit the property or properties,” reflects Bennett, who services clients in northern Michigan and North Carolina.

“(But) many of the children or heirs simply do not want these large homes because they can be very burdensome and expensive to maintain, assuming they have the financial means to continue ownership, and increasingly do not fit into their desired lifestyles.”

More to Consider

As a parent, there are other topics that you may want to consider, including whether your children would change the use of the property to a rental, and how that might effect neighbors you’ve known for a long time. Or, especially when your children are younger, thinking about the potential of disruptive gatherings or parties at the property. And if your property simply isn’t used much any more, it may be more beneficial to sell it and gift the proceeds to your children now rather than later.

As always, you’ll want to consult your estate attorney and accountant throughout the process.

Parents should also be cautious not to just leave it up to their children to sort out amongst themselves.

“There are times when one child buys out their siblings after their parent’s death,” says Boesiger. “But this typically creates animosity as the now excluded child still tries to use the family cottage, creating even further disruption.”

The Best Way to Avoid Disputes Between Your Children

Some may be surprised to learn that parents who want to leave their property to their children often skip a fundamentally important step in estate planning: Talking with their children.

Whether they put it off too long, forget, or simply weren’t advised to do so, parents who don’t talk to their children before or during their estate planning will likely risk inevitable future problems for their family.

Aside from including your children, Bennett advises that proper planning “must be a holistic and joint effort between an estate lawyer and CPA, at minimum,” and he also likes to bring in the family’s financial advisor to bridge any gaps.

It may be difficult for families to discuss estate planning, but, especially when a home or cottage is involved, early and open communication can help ensure the best outcomes for all involved.

Don’t Wait Until it’s Too Late

Without a doubt, when you want to leave your vacation property to more than one child equally, things can be more complicated. But while you can’t anticipate everything, thoughtful estate planning is key to mitigating future problems.

In most family estate situations, important decisions will have to be made sooner or later. And when it comes to leaving your property in northern Michigan to your children, sooner is always a better choice.

All content on this website is for information purposes only. Any information contained herein is not intended to provide legal or financial advice, nor does it create an agency relationship. All information is made available without any guarantee, warranty, or representation of any kind. It is your sole responsibility to seek the services of your own legal, financial, accounting, and real estate professionals prior to any such related decisions or transactions.

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