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.
Before giving a share of the family cottage to a child a parent should first ask the child if they want a share of the cottage.
When you form a Limited Liability Company (LLC) for your family cottage you create a company which has owners, and they are often referred to as "members of the company".
At the heart of a successful Cottage Succession Plan is "The Operating Agreement" designed to control the use and enjoyment of the family cottage. It provides a structure of rules to manage the operation of the cottage and includes the rights and obligations for each member of your cottage LLC. There are similarities with each operating agreement, but like the diversity of families, each plan is unique to that family's requirements.
The Power of Membership Units
When you think of a "company" it is natural to think in terms of owning a "share" in that company. Even though it is not required, most families issue "Membership Certificates" to the members of the cottage LLC. Having a solid certificate in hand also clarifies the identify of the owner and how many "units" in the company are held by that owner. An LLC can be structured to incorporate the principles of democracy - the members vote on everything so "Units" are important when members are voting on cottage operating and use concerns.
Now or Later?
Once you've decided to develop a cottage succession plan you will need to decide which type of Limited Liability Company (LLC) to form. This involves timing - when do you want the LLC to become effective. Now or Later?
An "Immediate LLC" takes effect "immediately" when you finalize your operating agreement, file articles of organization, and sign the deed.
A "Springing LLC" takes effect when the cottage owner dies and is set up through an estate plan.
Where?
You can establish and organize your LLC within any state, but most set the company up within the state where they have their permanent residence or within the state where the cottage is located.
Each state has similar Limited Liability Company Laws, but they are not identical. In some states LLC managers have complete control, whereas in other states more power is granted to members of the LLC.
Name Your Company
The name of your LLC has to be unique. States will not accept two LLCs with the same name. If you have decided on a name for your family cottage, and are establishing an "Immediate Cottage LLC" have your cottage law attorney reserve that name with the state where you are organizing your company. This will prevent another person from registering the name you have chosen for your LLC while you are finalizing your operating agreement.
Unfortunately you are not able to reserve a company name for a "Springing Cottage LLC" due to the time span between the drafting of an operating agreement and the owner's death.
Affordable graceful exits Sometimes a family member will want to make a "graceful exit" as a family cottage co-owner. A good cottage succession plan prevents forcing the sale of the family cottage with a partition lawsuit and establishes terms the family can afford to be able to keep the family cottage.
A protective cottage plan Call Dan Penning of Wright Penning & Beamer today to begin creating your cottage plan. Even a simple plan, which you can easily change and update, is better than the consequence of not being able to preserve the family cottage for your heirs.
Please call us!
We welcome your phone calls and questions you have 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.
Cottage Law is the practice area of Wright Penning & Beamer focused on family cottage sharing and 
