Saving the Family Cottage

A Guide to Succession Planning for Your Cottage, Cabin, Camp or Vacation Home

Saving the Family Cottage

Select Your Format

eBook (Downloadable)


Price: $29.99 $20.99

You Save: $9.00 (30% discount)

Book & eBook


Price: $29.99 $23.99

You Save: $6.00 (20% discount)

Saving the Family Cottage

Plan for the future

, Attorney; ; and , Attorney

, 4th Edition

Understand estate and succession planning with Saving the Family Cottage.  The definitive book on succession planning shows you how to keep your vacation home in the family for generations to come.  Find out how to:

  • allocate control between and within generations of owners
  • figure out which estate planning entity is right for you and your family
  • decide whether to establish an endowment

See below for a full product description.

Saving the Family Cottage is written in plain English by estate planning and succession experts Stuart Hollander and David S. Fry to help you plan to pass on your vacation home and keep it in the family. Complete with real-world examples and stories of cottage "wars" gone awry, this book breaks down the essentials for passing your cottage to the next generation.

Find out how to:

  • figure out which estate planning entity is right for you and your family
  • develop a cottage schedule
  • deal with co-owners who fail to pay their assessments
  • decide whether to establish an endowment
  • allocate control between and within generations of owners

Although the term "cottage" is used throughout, the practical advice from the authors applies to any property that a family wants to retain. With information for owners, attorneys and financial planners, this guide to succession planning makes a complex problem understandable and offers concrete solutions to what can be a delicate family matter.

The updated 4th edition has been revised to include the latest state and federal rules that apply to vacation home owners, including fully up-to-date estate tax information.

“Practical advice…”
-The Grand Rapids Press

“Nolo is always there in a jam as the nation’s premier publisher of do-it-yourself legal books.”
- Newsweek

Number of Pages
  • David Fry

    David S. Fry is a Michigan attorney whose practice also focuses on real estate and estate planning, particularly succession planning for second homes. He is a fourth-generation cottage owner and regularly presents seminars around Michigan on how to keep a cottage in the family.
  • Rose Hollander

    Rose Hollander has spent more than 19 years working and living in the heart of Michigan cottage country. She was the legal assistant/paralegal in a law practice with her husband, Stuart Hollander, whose practice centered on estate planning to help families concerned about passing on vacation homes. Rose met with families, helped draft documents, and helped families administer the estate after a death.

    Rose graduated from Ithaca College. Before working as a legal assistant, she worked as a personnel representative for the Stanford Court Hotel and then as the assistant to the General Manager of the Four Seasons Clift Hotel in San Francisco. She then owned a catering business in Northern Michigan.

    Rose is a Great Books leader and chairman of the board of a large Montessori school, and is active on stage in community theater. She has published several essays about life "up north" and parenting.

    You can visit her website at

  • Stuart Hollander

    The late Stuart Hollander was a lawyer with more than 20 years' experience helping families plan for succession of their vacation cottages.


Your Cottage Companion    1
Part I: Cottages at Risk

Chapter 1
Trouble in Paradise    7
Time for a Plan    10
The First Step    12

Chapter 2
Avoid the Worst: A Partition Parable    15

Chapter 3
Plan for the Best: Cottage Succession Goals    25
Founder Objectives    26
Heir Concerns    28
Shared Concerns    30

Part II: Choosing the Right Path

Chapter 4
How a Plan Helps Save the Family Cottage    35

Chapter 5
No Plan? Then 600-Year-Old Law Controls
the Cottage    45
Tenancy in Common    46
Nine Rules of Tenancy in Common    47

Chapter 6
Other Animals in the Property Law Zoo    59
Joint Tenancy    60
"Indestructible" Joint Tenancy    63
Tenancy by the Entireties    65
Community Property    66
Chapter 7
Short-Term Solutions    69
Using Life Estates    70
The Ownership Agreement    72
Part III: Cottage Plans in Action

Chapter 8
Choose the Right Legal Entity for
Your Cottage    77
Trusts and General Partnerships    79
The Limited Partnership    81
The Limited Liability Limited Partnership    82
The Corporation    82
The Close Corporation    83
The S Corporation    85
The Limited Liability Company    85
Comparing the LLC to the Pretenders    87
The Big Picture    88

Chapter 9
Welcome to the Club    91
Who Is in the Cottage Club?    92
The Branch Concept    96

Chapter 10
When and How to Organize the
Cottage LLC    103
Now: The Immediate Cottage LLC    104
Later: The Springing Cottage LLC    106
The Mechanics of LLCs    108
The Role of the Attorney    115

Chapter 11
The Cottage Safety Valve    119
The Put Price    120
The Discount    123
The Put Terms    125

Chapter 12
Cottage Democracy    129
Member Management    130
Using Managers    131

Chapter 13
Scheduling and Use    137
Kinds of Sharing Systems    138
Creating a Fair and Sustainable Cottage Sharing
System    139
Cottage Users    144

Chapter 14
Renting the Cottage    149
Is Rental Permitted?    151
Rental Operations    152
Who Is the Landlord?    154
Liability    155
Part IV: Creating a Cottage Legacy

Chapter 15
Minimizing the Federal Tax Bite    163
Death, Taxes, and Cottages    164
The Price Tag on Cottage Units    175
Appraisals and IRS Reporting    178

Chapter 16
The Ultimate Gift: A Cottage Endowment    179
What Is an Endowment?    180
How Is an Endowment Established?    181
Size of the Endowment    183
How Do Heirs Feel About an Endowment?    184
The End of the Endowment    185
How an Endowment Is Used    186
How an Endowment Is Managed    186

Glossary    189

Bibliography    195

Appendix: Table of Contents
Cottage Limited Liability Company
Operating Agreement    205

Index    209

Chapter 1
Trouble in Paradise

Time for a Plan............................................................ 10

The First Step.............................................................. 12



At Monica’s family cottage, memories linger like ghosts: grandmother and her formality, fishing poles on the porch, sunlight on the lake, Lassie Come Home moments, scavenger hunts, and Monopoly till midnight. Today, Monica can walk into the cottage’s toy closet and it still has that certain smell. “There are so few places in life that seem to not change so much,” she says. “That is one of the reasons I love our cottage. It always stays the same.”

And indeed, with proper estate planning, family cottages can be used by generation after generation, passed from hand to hand like a precious heirloom, to be filled with new memories, new little feet, and new togetherness, as those revered elders smile down from the mantel.

Monica and her siblings wanted to create an estate plan that would keep her lakeside cottage in her family, so her children and their children’s children could share sunny, lazy summer days together.

To achieve that, Monica definitely does need a plan—but not just any plan. She needs a new form of cottage succession planning that helps protect future generations from showdowns over everything from scheduling to selling the property. Too many cottages go from happy idylls to combat zones, with forced sales, severed relationships, and siblings hurling letters like this at one another: “I am finished with this whole thing. I am tired of dealing with attorneys and you three. I want out now!” Hardly the stuff of sunlit memories.

The terrific appreciation of lakefront and -view property in the past generation has changed the way some in the family view their cottage, making strife all the more likely. A cottage may be the most valuable asset a family owns. While some heirs think of cottages as sacred family retreats, others may resent having their inheritance tied up in the old place. Stepchildren and spouses who did not grow up at the lake often have weak emotional ties to the cottage but strong ties to its cash value. Some siblings never got along.

All of this sets the stage for trouble in paradise. Having no plan for the family cottage, or even relying on a traditional estate plan, makes the cottage and families vulnerable to turmoil. Formal cottage plans change the way families own their interests in the cottage.

Instead of holding a direct interest in cottage real estate, family members own membership units in a limited liability company (LLC), a form of business entity described in Chapter 8. The LLC owns the cottage real estate, the cottage furnishings, and perhaps the boats. Instead of transferring interests in real estate to their children, founders transfer the membership interests in the LLC to the cottage heirs. This method means the relationship of the members’ children to the cottage is governed by the LLC operating agreement, not ancient common-law doctrines. The operating agreement determines everything about the cottage, including scheduling, contributions to expenses, permissible owners, renting, maintenance, and whether the property can be mortgaged. It prevents forced sales, but allows for graceful exits. Chapters 9 through 14 show you how to adapt the LLC operating agreement to your family’s needs.


See an Expert

You’ll need an attorney’s help. With the exception of Louisiana, which derives its laws from the French Civil Code, the real estate law principles described in this book generally apply to cottages throughout the United States. States, however, can and do deviate from classic common-law principles, so the principles stated here may not describe the outcome under the law of the state in which your cottage is located. Please consult a qualified attorney in your state for advice on what’s best for you and your family cottage. (And if you’re Canadian, the limited liability company is not available to you—but because both the U.S. and Canadian legal systems are based upon English common law, the discussion of real estate law, and practical considerations about sharing a cottage, should still be useful.)

Time for a Plan

There is no time like the present to make plans for your cottage’s future survival. Don’t be tripped up by the most common reasons owners die without a plan. We’ve seen them all, and none of them help when you are gone and your children (and the cottage) run into trouble. Common reasons to avoid making a cottage succession plan include:

The Reason:       Inability to solve an identified family problem.

“John always argues with his brother but they both love Lands End. I don’t know what I’m going to do.”

The Reality:        The cottage will probably deepen any discord between children and it may end up being sold.

The Reason:       Idealism. Parents want to believe that everyone will live happily ever after in the cottage. This relieves them of the need to plan. It will all work out just fine.

The Reality:        The partition cases I’ve handled are proof that it doesn’t always work out just fine.

The Reason:       Unwillingness to impose wishes on heirs.
 “I don’t want to rule from the grave.”

The Reality:        Even children who can work together need a plan to avoid wrangling over scheduling, taxes, and maintenance. A founder who develops a plan in consultation with the heirs has the authority to make final decisions on how the cottage will operate. Often the founder will serve as a tiebreaker in unresolved debates between heirs.

The Reason:       Lack of foresight.

“What, me plan?”

The Reality:        Bad things are more likely to happen without a plan.

The Reason:       Unwillingness to make the required effort or to incur the expense of developing a plan.

“I’m giving them the cottage, isn’t that enough?”

The Reality:        Founder-developed plans generally cost less than heir-developed plans because the founders (usually a married couple) are more likely to see eye-to-eye than their children. If you are giving them the cottage, finish the job and give them a plan to ensure they enjoy the cottage too.

The Reason:       And the ultimate dismissal—a big shrug.

“Hey, I’ll be dead. It’s not my problem.”

The Reality:        True enough. How do you want to be remembered?

Many successful founders are careful planners. Sometimes, however, planning is delayed or prevented by the perfectionist’s instinct to address every eventuality. Is your family better off with a perfect plan that is never implemented because it wasn’t completed by your death, or with a pretty-darned-good plan that was completed in time to be binding?

We often remind clients not to let the perfect get in the way of the perfectly adequate. In other words, your cottage plan doesn’t have to be perfect. Almost all of the planning methods described in this book may be revised during your lifetime. Most founders wisely allow their heirs to amend the plan after the founder’s death to meet the family’s changed circumstances or wishes. Founders: please prepare a plan now. Your descendants will thank you for it.

That’s a Lot of Potential Lawsuits

There are more than 5.2 million vacation homes in the United States and about 600,000 in Canada, according to the Canadian Coalition of Provincial Cottagers’ Associations. One of every 20 housing units in the United States is a cottage.

The general increase in cottage values, together with the fact that more than 80% of them are owned free and clear of mortgage debt, means the cottage often represents a substantial part of an owner’s estate. This sets the stage for a tug-of-war between heirs of modest means (who may be counting on their share of the value of the cottage to pay debts, put their kids through college, or improve their lifestyle) and heirs who have been financially successful (to whom the prospect of using the cottage is more desirable than its cash value). It’s an equation for heartache on a large scale.


The First Step

Stuart’s mother had a pine sideboard that she just loved. She kept her precious china and glassware in it and dusted her treasures all the time. She really wanted Stuart to have the sideboard and had already picked out the wall in his house where it would go. The only problem was he had never liked the Early American sideboard, which didn’t fit in his Arts and Crafts house. Porcelain and glass didn’t excite him—perhaps a holdover from his days in earthquake-prone San Francisco. Sure enough, when he inherited the sideboard, he gave it away.

Imagine if, instead of a sideboard, it had been a share of a cottage. There are many good reasons why somebody wouldn’t want a share of a cottage: the expense of maintaining it, bad memories, geography, a spouse’s feelings, and (especially) a preference for the cash value it represents.

The cardinal rule of cottage succession planning is that, before giving it to a child, parents must confirm a child really wants a share of the cottage.

This is not as obvious or simple as it sounds. Parents love the cottage—if they didn’t, they either would have sold it or made arrange­ments to sell it at their deaths. A parent’s emotional ties to the cottage can blind the parent to the child’s feelings about it. A parent may have a hard time understanding why his child might not want an interest in the cottage, even if it requires the child to make financial sacrifices (as the parent may have done to acquire and keep it).

A mother of three once asked Stuart to prepare a cottage succession plan. She was the third-generation owner and some of her grandchildren (who would be fifth-generation owners) already had fallen in love with the cottage. She wanted to be sure that the cottage would be available for them to use and ultimately acquire.

This client—let’s call her Mary—must have had some hint that trouble was in the wind. She brought one of her daughters to the first meeting. The daughter expressed great love for the cottage and said she and her brother would want a share of it, but worried that her older sister, who had no children and lived far away, might not want any part of the cottage.

The childless daughter, Ann, attended the next meeting. She politely but emphatically stated she didn’t want a share of the cottage. This seemed to take her mother by surprise. Stuart reviewed Mary’s financial statement and assured Ann that her mother would have the resources to give her cash rather than a share of the cottage. Ann, who entered the meeting quite anxious, left with a smile on her face. Mary left the meeting stunned, but later amended her estate plan so that Ann would not receive a share of the cottage. By forcing her children to reveal their feelings about the cottage, Mary surely averted great heartache within the family.



Why it’s hard to keep vacation homes in the family. The problems with passing on a vacation cottage and keeping peace in the family aren’t just legal; they’re emotional and even sociological. In the pioneering book Passing It On: The Inheritance and Use of Summer Houses, the late professor Judith Huggins Balfe described sociological aspects of summer home ownership. It was the first book to tackle why it is difficult to share and pass on summer homes. Professor Balfe and her brother, Ken Huggins, also wrote a companion workbook that contains useful questionnaires, intended to help families with succession planning.


Customers Who Bought This Item Also Bought