Your Vacation Home's Next Chapter: Who Gets the Keys?
The cherished family vacation home could become a cause of conflict without a specific plan for how it will pass to your heirs — and a conversation about who actually wants it.
A family vacation home isn't just an asset on a balance sheet. It's where holidays happen, where grandchildren learn to fish or ski, and where family traditions and values get passed down almost as much as the property itself.
That is exactly why a vacation home deserves its own planning conversation — one that is fully integrated into the rest of your estate plan. Without a plan, a home that was meant to bring a family together can end up doing the opposite.
Why a vacation home is different from other assets
A primary residence often has a relatively straightforward path: It's sold or one person inherits. A vacation home can be more complicated because several family members may expect to share it. And "sharing" a single piece of property among siblings, cousins or in-laws is rarely simple once the original owners are gone.
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A few things make vacation homes uniquely tricky to plan for:
- Shared but unequal use. One sibling may visit every summer; another may live across the country and rarely use it. Yet costs and decisions are often expected to be split evenly.
- Ongoing expenses. Property taxes, insurance, maintenance and repairs don't pause when the owners pass away, and often the children were not aware of how much it cost to maintain the property. Someone has to keep paying, and disagreements over who pays what — and how much — can quickly become a source of family conflict. Sharing actual numbers related to expenses is essential to helping the next generation make sound decisions.
- Out-of-state or out-of-country property. A vacation home located in a different state or country from the owner's primary residence can create additional estate administration, probate or tax considerations, depending on the jurisdiction and how the property is owned.
- Sentimental value vs financial value. Family members don't always agree on whether the goal should be to keep the property in the family at almost any cost or to treat it as another asset that can be divided or sold.
What can go wrong without a plan
Families that don't address the vacation home specifically tend to run into the same handful of issues:
- Co-owners disagree about selling, renting or remodeling, with no mechanism to break a tie
- One branch of the family uses the property heavily while another resents paying a portion of the upkeep
- Ownership becomes diluted over generations as the property passes to more heirs, each owning a smaller fractional share, until decision-making becomes unworkable
- One child is left managing the property and bearing the costs, without authority to make important decisions or sell the home if necessary
The common thread is that simply deciding who gets the house isn't enough. A good plan also needs to address how the house will be owned, used, paid for and, eventually, sold or transferred.
Planning tools families can consider
There is no single "right" answer. The appropriate structure depends on your family's goals, the number of heirs involved and how long you hope to keep the property in the family. That said, a few tools come up often in this kind of planning:
- A trust. Placing the property in a revocable living trust can help it pass to heirs without going through probate and allows the original owners to set clear terms for how the property should be used, maintained or eventually sold.
- An LLC or family entity. Some families place the vacation home into a limited liability company or family limited partnership, with each heir holding a membership share rather than a direct deed interest. A manager can be appointed with primary decision-making authority. This can make it easier to set rules around usage and buyouts, and can simplify what happens if one heir later wants to sell their share.
- A co-ownership or usage agreement. Whether or not a trust or LLC is used, a written agreement spelling out how the home will be used and paid for is one of the most practical tools available. It can address a usage schedule, how expenses are split, what happens if someone wants out and who has final say on big decisions, such as major repairs or a sale.
- Gifting strategies. Depending on the value of the property and the family's broader estate plan, gifting an interest in the home during the owners' lifetime may be worth considering. For some families with significant estate tax exposure, more specialized strategies, such as a qualified personal residence trust (QPRT), may also be appropriate. These strategies can have meaningful estate, gift and income tax consequences, so they should be evaluated with your financial adviser, tax professional and estate planning attorney.
- An honest conversation about selling. Not every family will decide to keep the vacation home. Sometimes the most practical plan is to sell the property and divide the proceeds, especially if heirs live far away, have different financial situations, have challenging relationships with each other or simply don't have the same attachment to the property as the original owners.
Before deciding on your approach, there is a more basic question to answer: Does the next generation actually want the house?
Parents sometimes spend considerable time and money creating a structure designed to keep a vacation home in the family without first asking whether their children even want to own it together. One child may treasure the idea while another would prefer to receive other assets. Knowing your children’s preferences in advance can shape the entire plan.
Planning is more than paperwork
Legal documents matter, but they aren't the whole solution. Some of the most effective planning and conversations happen around the kitchen table, not in an attorney's office.
- Talk to the next generation before drafting anything. Find out who actually wants to keep the property. Some heirs may prefer receiving a like amount of assets instead of a portion of the family home.
- Put usage and expense expectations in writing. Even within a formal ownership structure, clear expectations give family members something concrete to point back to when questions arise. Some families even use an app or shared calendar to reserve times and track usage.
- Name a decision-maker or manager. Whether it is one heir, a rotating role or an outside property manager, someone should have clear authority to handle day-to-day issues.
- Revisit the plan periodically. Family circumstances change. Children marry, move or have children of their own, financial situations evolve and the property itself may become more expensive to maintain. A plan that made sense 10 years ago may not fit the family today.
The takeaway
A vacation home can carry sentimental meaning that a typical asset does not, which is exactly why it deserves a deliberate plan rather than an assumption that "the kids will work it out."
The right legal structure — whether a trust, an LLC, a usage agreement or some combination — depends on the family's specific goals. What matters most is starting the conversation early.
Begin by talking with the people who may eventually inherit the home. Ask whether they want it, how they envision using it and whether they're prepared to share the tangible responsibilities and realistic costs that come with ownership.
From there, you can build a plan around what the family actually wants rather than what you assume it will want. That conversation may ultimately do as much to preserve the family vacation home — and the relationships surrounding it — as any legal document.
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