Many families in the Estes Valley share a cabin which has been in the family for decades. When the parents who own it die, the cabin often passes in equal shares to their children, and then to their grandchildren, until a property that was once owned by two people is owned by a dozen, some of whom use it every summer and some of whom have never seen it. A family cabin trust is one way to plan for that before it happens.
How a Cabin Trust Works
The owners transfer the cabin to a trust, along with (ideally) a reserve fund for taxes, insurance and repairs. A trustee manages the property under a trust agreement that sets the rules the family would otherwise have to negotiate later: who may use the cabin and when, how expenses are shared, how major repairs are approved, whether the cabin may be rented, and what happens if the family decides to sell.
Questions to Answer Before Choosing a Trust
A trust is well suited to keeping a property intact, because the beneficiaries cannot sell or mortgage their interests on their own. The same feature can make a trust inflexible. In particular, a family considering a cabin trust should ask:
- Who will serve as trustee now, who will serve in thirty years, and how will each trustee be replaced?
- How will the trustee be held accountable to the rest of the family?
- Can a family member who no longer wants to participate be bought out, and on what terms?
Where flexibility, buyouts and shifting ownership matter more than keeping the property locked up, a Family Cabin LLC is often the better structure. Some families use both, with an LLC holding the cabin and a trust or estate plan holding each member’s interest.
Coordinating With the Rest of the Plan
A cabin trust is usually part of a larger Trust or estate plan, and the transfer of the cabin into the trust is done by deed (see Property Deeds). Before any transfer, we check the existing title, any mortgage on the property and any association covenants that may restrict use or rental.