Cottage-Law Cottage Law is the practice area of Wright Penning & Beamer focused on family cottage sharing and cottage succession planning. Our Suttons Bay office in the historic Depot is known nationally as "The Home of Cottage Law."
"The Home Cottage Law" Wright Penning & Beamer acquired the general law practice of the late Stuart J. Hollander, located in the historic Suttons Bay Train Depot, at the end of 2007.
A centralized office in the Grand Traverse area in Leelanau County enhances our local involvement with our family of clients in northern Michigan - from Clare clear north of the Mackinac Bridge! Living and working in this community lets us know first-hand many day-to-day issues facing their families, property, industries and businesses.
You've spent a lifetime of summers at the cottage. Family memories live there and it's the only place where laughter replaces phones, the sun is your clock, and keeping sand out of your shoes is the challenge of the day. Each summer is a chance to create family memories of good times all over again.
It's easy to believe this is how you, your children, and your grandchildren will always spend your summers, at the family cottage by the lake.
But the reality of real estate laws and rhythms of life and death could alter your dreams and goals of harmonious sharing of the family cottage by future generations.
Real Estate Law Surprises
There is a lot to consider when planning the family cottage's future survival. Yes, you could draw up a simple will and leave the family cottage equally to your children, but real estate law surprises put the family cottage at risk.
If there are no specific, and enforceable, instructions about how the cottage co-ownership should be managed you potentially place your valuable family legacy asset in harm's way.
Real estate law does not promote keeping the the family cottage in the family for multiple generations.
How your emotions and sentiments are woven into the family cottage may not match how your children, and their spouses, view the family cottage. A child might not want any part of the cottage because they can't afford it, they live in another state and aren't able to use it, or they simply want to "cash out their inheritance" for its cash value, or worse yet, your child might lose their portion of the cottage during a divorce. All are messy situations without equitable solutions for all your children without a plan.
Forced Sale of the Family Cottage
This is where things could potentially go very wrong.
Our American legal system is based upon common law. Our real estate laws are based upon 600 year old laws which have not changed much over the years.
What could happen next depends on the first paragraph of the deed for the family cottage property. If you leave your cottage equally to your children in the standard way as "tenants in common", which is the traditional form of real estate ownership, any "tenant in common" (your children become co-owners) could force the sale of the cottage. This is called The Right to Partition.
The principle behind The Right to Partition is based upon English common law that no person can be required to own property. If there is a legal conflict between your children, or the co-owners of the cottage property, a court will order the sale of the cottage property if it cannot be divided in a fair way - easy to do for land, but how do you equally divide a building or a boat or a wooden dock? You can't. The cottage property will be sold and the proceeds from the sale will be equally divided between the co-owners.
Protecting and Saving the Family Cottage using Entity Laws
In 1993 Michigan created the Michigan Limited Liability Company Act (LLC). Every state has since adopted similar limited liability company statutes. The creation of this Public Act provides the legal framework, through Entity Laws, to change the relationship of owners.
Indirect ownership of the family cottage using the correct legal entity also shields and protects the cottage owner from personal liability in the event a person is injured while at the cottage.
Every kid should catch a fish, dive off a raft, paddle a canoe, skip stones and roast a marshmallow by a fire next to the lake and eat a donut or ice cream cone from a food shack which opens every summer.
It's easy to begin planning today Call Dan Penning of Wright Penning & Beamer today to begin the process of creating your cottage plan. Having a simple plan in place, which you can easily change and update, is better than the consequence of not having a protective cottage succession plan for your heirs.
Please call us! We welcome your phone calls and questions about planning for the future of your cottage, property tax "uncapping", property tax appeals and related tax matters.
Dan A. Penning
231.271.4500 Suttons Bay
248.477-6300 Farmington Hills
The information contained in this website, www.cottage-law.com is meant for informational purposes only and is not intended as legal advice. Laws and their application vary based upon a client's unique facts and circumstances. Wright Penning & Beamer disclaims any responsibility for action taken in reliance on this website without further consultation and analysis. For questions, please contact us at 248.477.6300, 213.271.4500 or at info (at) wrightpenning.com.
If you leave your cottage equally to your children in the standard way as "tenants in common", which is the traditional form of real estate ownership, any "tenant in common" (your children become co-owners) could force the sale of the cottage. This is called 