Who Inherits the Cottage by the Lake?

A sucession plan

Making a plan can be complicated, especially when multiple marriages are involved. Valerie Atkin, 58, and Russell Pitts, 62, were newlyweds in 2001 when they purchased a cottage in Saugatuck, Mich. They immediately considered the future impact that the property—a two-bedroom, two-bathroom cottage with a 400-square-foot guest house—might have on their adult children from their first marriages.

The couple was determined to ensure the property wouldn’t bring discord among the children later on. Atkin had just lost her mother and had seen disagreements firsthand over items worth much less than a piece of real estate.

So Atkin and Pitts sat down with her three children and his two individually to get their input before meeting with an attorney. “It basically worked out that two of mine and one of his liked the idea of keeping the cottage,” she says. Her daughter, who now lives in another state, and one of his sons, who owns a boat that his family consider to be its cottage, were less interested in keeping it.

The agreement that was subsequently drafted leaves the cottage entirely to her children—her money was used for the down payment—with the understanding that both of Pitts’ sons will be able to use it. But the couple considers this to be only a temporary solution, and intend to revise it to spell out buyout options as well as designate a usage schedule.

Dealing with a legacy means dealing with death. And many parents find it difficult to initiate the subject with their adult children, says Dr. Chip Long, a psychologist in Little Rock, Ark. But he says it’s important that parents find a way to share the thought process behind their decisions and hear their children’s concerns.

“You don’t want to hold off until a crisis hits and then have to rush through one of these types of discussions,” adds Long.

Next: You may need a buyout plan. >>