A vacation home represents something far more meaningful than real estate. It’s where children spent their summers, where generations gathered for holidays, and where some of life’s most treasured memories were made.
It’s understandable, then, that parents often dream of passing these properties down to their children, hoping the home will remain a gathering place for generations to come.
But what happens when the next generation doesn’t share the same vision?
A recent New York Times article, “When the Family Beach House Becomes a Point of Tension,” explores how inheriting a beloved family property can create unexpected financial burdens, disagreements, and even lasting estrangement among siblings.
And the stakes are growing.
According to Cerulli Associates, an estimated $124 trillion in wealth is expected to transfer through 2048, including approximately $105 trillion destined for heirs. Real estate will represent an important part of that transition.
Already, inherited homes account for a record share of U.S. property transfers. According to housing data provider Cotality, approximately 340,000 properties were transferred through inheritance in the 12 months ending August 2025, representing 7% of all property transfers.
But transferring ownership is only part of the challenge.
A 2026 survey by Inherited Property Match found that 76% of respondents with multiple family decision-makers reported disagreements over inherited real estate. More than half said grief or emotional attachment delayed decisions about the property. The voluntary survey focused on people who had sold or were actively selling inherited properties, rather than all families receiving an inheritance.
As the Great Wealth Transfer unfolds, families and their financial advisors face an increasingly important question: How do you preserve a family’s legacy without turning a cherished asset into a source of conflict?
The answer begins by recognizing that there is more than one way to pass down a family vacation home, and keeping the property isn’t always the best choice.
When a Family Legacy Becomes a Shared Responsibility
When multiple children inherit a vacation home, they effectively become business partners, whether they intended to or not.
Suddenly, decisions once handled by their parents become collective responsibilities.
Who pays for property taxes, insurance, and a new roof? Who gets the house during Thanksgiving or the Fourth of July? Can family members rent the property to generate income? What happens when one sibling wants to sell and another wants to keep it?
These questions become especially complicated when siblings have different financial circumstances, live in different parts of the country, or have competing priorities.
One sibling might view the property as a cherished family gathering place. Another might see an expensive financial obligation. A third might prefer to sell their share to purchase a primary residence, fund retirement, or support their children’s education.
None of these perspectives is inherently unreasonable.
The challenge arises when families are left to reconcile them during an already emotional period, often without clear instructions or a framework for making decisions.
Thoughtful estate planning can help families address these questions before they become sources of conflict.
Before Passing Down a Vacation Home, Consider the Alternatives
One of the most important estate planning conversations isn’t necessarily about how children will inherit a vacation property. It’s about whether they should inherit it together at all.
There are several approaches worth considering, each with different financial, legal, and personal implications.
1. Direct That the Property Be Sold
For some families, the most practical decision is to sell the vacation home after the owner’s death and distribute the proceeds among beneficiaries.
A properly drafted will or trust can direct an executor or trustee to sell the property, subject to applicable law, the property’s ownership, and the estate planning documents.
This approach can help avoid placing beneficiaries into an unwanted co-ownership arrangement or leaving them to negotiate the property’s future.
Parents may recognize that while their children love visiting the family home, they don’t necessarily have the time, financial resources, or interest to maintain it.
Requiring a sale may seem counterintuitive when a property holds generations of memories. But preserving family relationships can be more important than preserving ownership of a particular asset.
2. Leave the Property to One Beneficiary
Equal treatment of children doesn’t always require dividing every asset equally.
Consider a family with three children and a $1.2 million vacation home. One child wants to keep the property, while the other two have little interest in maintaining it.
Rather than leaving each child a one-third ownership interest, the parents might leave the property to the interested child and distribute other assets to the remaining beneficiaries.
Depending on the estate’s composition, this arrangement may help achieve the parents’ intended balance without requiring siblings to share ownership.
However, this approach introduces its own considerations. What if the property represents most of the estate’s value? What if its value changes significantly? Are there sufficient liquid assets available to provide for the other beneficiaries?
Evaluating the vacation property alongside the family’s broader estate is essential to understanding whether this approach is feasible.
3. Give Beneficiaries the Option to Purchase the Property
Another possibility is to give one or more beneficiaries the opportunity to purchase the vacation home before it is sold to an outside buyer.
For example, a trust could establish a defined period during which interested beneficiaries may purchase the property at a price determined through an agreed-upon appraisal process. If multiple beneficiaries are interested, the trust could provide for a competitive bidding process or auction to determine who ultimately purchases the home.
If no beneficiary exercises that option, the trustee could be directed to sell the home and distribute the proceeds according to the trust’s terms.
This approach gives family members a chance to preserve ownership without requiring anyone to assume the property’s responsibilities.
The estate planning documents should clearly establish how the purchase price is determined, how competing offers are handled, and what happens if a beneficiary cannot complete the purchase.
4. Establish a Structure for Shared Ownership
When multiple beneficiaries genuinely want to retain the property, shared ownership can be a reasonable choice. But it requires more than simply dividing the deed among siblings.
Depending on the circumstances, an estate planning attorney may recommend holding the property through a trust, limited liability company (LLC), or another ownership arrangement.
A trust can establish decision-making authority, management responsibilities, and instructions regarding the property’s eventual distribution or sale.
An LLC, paired with a thoughtfully drafted operating agreement, may provide a framework for ownership percentages, expenses, voting rights, and transfers of ownership interests.
These approaches have different legal, tax, and administrative consequences, and neither is automatically appropriate for every family.
The objective is to establish clear expectations around the property’s use, management, and financial responsibilities, including how ongoing expenses such as maintenance, property taxes, and insurance will be funded. Families may consider setting aside sufficient assets in a trust to cover these costs or establishing an agreed-upon rental arrangement to help offset expenses. Addressing these questions upfront can reduce the likelihood that everyday decisions become larger disputes.
5. Preserve the Home for a Defined Period
Parents may want their children to enjoy the vacation home for years after their death without requiring the property to remain in the family indefinitely.
A trust can be designed to maintain the property for a defined period, with instructions governing its use, management, funding, and eventual disposition. However, preserving the home also requires a financial plan. Parents may consider allocating sufficient assets to the trust to cover ongoing expenses or establishing provisions that allow the property to generate rental income to help fund its upkeep.
Alternatively, an ownership agreement could establish circumstances under which the property may or must be sold, particularly if maintaining the home becomes financially impractical.
These provisions could address insufficient funds for maintenance, changing beneficiary preferences, or the inability to reach agreement on major decisions.
A defined timeline or clear exit provisions can recognize an important reality: A vacation home that works for one generation may not work for the next.
These arrangements must be drafted with attention to applicable state law and the responsibilities of trustees and other decision-makers.
Five Considerations for Families Planning to Keep a Vacation Home
For families who decide to preserve shared ownership, the next challenge is establishing a plan that works in practice.
1. Start the Conversation Before the Inheritance
One of the most valuable estate planning steps takes place before legal documents are drafted: having an honest conversation about what family members actually want.
Parents may assume their children will want to keep the vacation home because they loved spending time there growing up.
But enjoying a property and taking responsibility for it are very different things.
Families should discuss whether keeping the home is a shared priority, who is willing to assume responsibility for it, and whether some beneficiaries would prefer to receive other assets.
These conversations can be uncomfortable, but they are often easier to navigate while parents are alive and able to communicate their intentions.
2. Plan for the Ongoing Financial Responsibilities
Even a mortgage-free vacation home can carry significant annual expenses.
Property taxes, insurance, utilities, maintenance, repairs, and unexpected improvements can create financial pressure, especially when beneficiaries have different resources.
Families should consider establishing a reserve for ongoing expenses, potentially funded through the estate or trust. They should also determine how future costs will be allocated, how major expenses will be approved, and what happens if an owner cannot or chooses not to contribute.
Renting the property to generate income may help offset costs, but it also introduces additional management, tax, insurance, and regulatory considerations.
A plan for inheriting the home should also be a plan for affording it.
3. Establish Rules for Use and Decision-Making
One of the most common sources of disagreement is how family members use the property.
An ownership agreement can address practical matters such as scheduling, holidays, guest policies, maintenance responsibilities, and whether the home may be rented.
It can also establish which decisions require unanimous agreement, which may be made by majority vote, and who has authority to handle day-to-day operations.
For some families, appointing a designated property manager or independent decision-maker may help reduce friction.
Clear expectations can make shared ownership more manageable while allowing family members to focus on enjoying the property.
4. Create a Process for Disagreements and Buyouts
Even when everyone agrees today, circumstances can change.
A child who wants to keep the property may later relocate, experience financial difficulties, or simply lose interest.
Families should establish procedures for what happens when an owner wants to exit, including how ownership interests will be valued and whether other family members have the right to purchase them.
A well-designed agreement can also establish dispute resolution procedures and conditions for selling the property.
Without clear provisions, beneficiaries may face costly negotiations or litigation when disagreements cannot be resolved.
Planning for potential disagreements doesn’t mean expecting family relationships to deteriorate. It means recognizing that families, finances, and priorities evolve.
5. Revisit the Plan as Circumstances Change
Estate planning isn’t a one-time exercise, particularly when real estate is involved.
Changes in property values, tax laws, family circumstances, and beneficiaries’ financial needs can affect whether an existing arrangement still makes sense.
A plan designed when children are young may require reconsideration once they become adults with families and financial responsibilities of their own.
Periodic reviews can help ensure that ownership structures, funding arrangements, and instructions continue to reflect the family’s intentions.
Don’t Overlook the Tax Implications
Decisions about when and how to transfer a vacation home can have significant tax consequences.
Under IRS rules, inherited property generally receives an income tax basis equal to its fair market value at the owner’s date of death, subject to certain exceptions and alternative valuation rules.
By contrast, property gifted during the owner’s lifetime generally retains the donor’s adjusted tax basis for purposes of calculating a future gain.
For a vacation home that has appreciated substantially over several decades, this distinction can materially affect the capital gains taxes beneficiaries may owe when the property is eventually sold.
Trust structures also require careful consideration. Not every transfer involving a trust results in the same basis treatment, and state-level estate, inheritance, and property tax rules can introduce additional complexities.
Families considering a lifetime transfer, a sale during life, or an inheritance through a trust should work with their legal and tax professionals to understand the implications before making a decision.
The Financial Advisor’s Role in Protecting the Family Legacy
Discussions about inherited real estate are often treated as legal matters to be addressed after a family member passes away.
But financial advisors have an opportunity to bring these conversations forward, helping clients evaluate how a vacation property fits within their broader financial and estate plans.
According to Cerulli Associates, 89% of surveyed high-net-worth advisory practices identified conducting family meetings and maintaining regular communication among family members as a key best practice for wealth transfer planning.
Vacation homes provide a natural starting point for these conversations.
Advisors can help clients explore several important questions:
- What does the family actually want to preserve? Is the priority maintaining the physical property, preserving family traditions, or ensuring an equitable transfer of wealth?
- Do beneficiaries want the responsibility? Have family members discussed whether they want to inherit the property and what ownership would entail?
- Can the next generation afford the inheritance? Are there sufficient liquid assets available to cover ongoing expenses, major repairs, or potential buyouts?
- Does the existing estate plan reflect the family’s intentions? Do the property’s ownership and estate planning documents align with the family’s desired outcome?
- Have the right professionals been involved? Should an estate planning attorney or tax advisor evaluate ownership structures, transfer provisions, or potential tax implications?
These conversations become more effective when advisors have a comprehensive understanding of their clients’ estates.
By reviewing estate planning documents, understanding asset ownership, and identifying potential gaps or inconsistencies, advisors can help clients recognize issues that might otherwise go unnoticed.
Working collaboratively with estate planning attorneys and tax professionals, advisors can support thoughtful decisions before a family is forced to make them under difficult circumstances.
The Most Important Legacy May Not Be the Property
The Great Wealth Transfer isn’t simply about transferring financial assets from one generation to the next. It’s also about passing down responsibilities, expectations, and family history.
A vacation home that represents decades of happy memories to one generation may represent an entirely different set of obligations to the next.
That doesn’t mean families should avoid leaving vacation properties to their children. It means they should approach the decision with the same care and intentionality they bring to other significant estate planning decisions.
For some families, the right solution will be a trust that preserves the home for future generations. For others, it may be leaving the property to one child, offering beneficiaries the opportunity to purchase it, or directing that the home be sold and the proceeds distributed.
A successful estate plan doesn’t necessarily preserve ownership of the family vacation home. It helps preserve the relationships, opportunities, and memories that made the home meaningful in the first place.
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This article is intended for educational purposes only and does not constitute legal, tax, or financial advice. The appropriate treatment of real estate depends on individual circumstances, applicable state laws, and the terms of relevant legal documents. Families should consult qualified legal, tax, and financial professionals before implementing an estate planning strategy.
