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Succession Planning

Who Inherits the Cottage by the Lake?

To stop siblings from squabbling, put a plan in writing

Family going on vacation

— Bill Owens/Gallery Stock

A buyout plan

If your heirs don’t agree about keeping the property, Fry strongly advises creating a buyout plan. This would include a provision to minimize the financial burden for family members who buy out a sibling.

The buyout price is typically set at substantially less—perhaps 30 percent lower—than if the cottage were sold to a third party, he says. Payment terms can extend over many years.

A decision then needs to be made about whether or not the bought-out sibling has a right to occupy, or even visit, the property. “It’s not unheard of for some people to sell their interest and feel they [still] have a right to enjoy the place,” says Fry.

Greed for quick money may play a role for some sellers, says Fry, but often adult children simply can’t afford the maintenance costs of the property or the property taxes—especially in tough economic times.

One way to mitigate such pressure, Fry says, is to set up an endowment from other assets that will generate income to pay expenses. This reduces what children have to contribute annually.

Fry says there are typically several other issues that should be included in a cottage succession plan:

  •  Decision making about common homeowner issues such as repairs and maintenance.
  •  Division of maintenance costs, property taxes and other expenses.
  •  Scheduling of usage of the cottage.
  •  Ownership rights if one of the co-owner siblings dies. Does a surviving spouse inherit the share?


A succession plan is basically a “once-in-a-lifetime opportunity to minimize the amount of conflict with your children,” says Fry. “You should get a plan in place—and understand that not all of your children are going to agree with all of it.”

Darci Smith is a freelance writer who lives in Chicago.

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