Our Firm

“Cottage law” refers to the legal tools used for cottage succession planning. The goal of cottage succession planning is to set up legal ground rules that provide the best chance to keep a cottage in the family for multiple generations. Cottage law draws on legal concepts from estate planning, real estate and business law. A cottage plan usually addresses these concerns through the creative use of a limited liability company (LLC) to own the property.

Properly crafted, the LLC’s Operating Agreement covers such topics as who can own a share of the cottage, who pays to maintain it (and what happens if they don’t), who gets to use it and when, how to make decisions regarding the property, and how to respond when an owner wants to get out of the arrangement for any reason. Beyond those basics, each plan can be “customized” for the individual family, and may include any other subject that is likely to be the source of friction or conflict among family members of the next or succeeding generations of owners.

While the advantages of the LLC approach to vacation property ownership described above remain valid, recent changes in Michigan property tax laws have created a significant advantage to using a cottage trust instead of an LLC.  The advantage lies in the way a transfer of ownership of property impacts property taxes.  For families in Michigan whose property has significantly increased in value since it was acquired by the current owner(s), using a cottage trust instead of an LLC may save the family thousands of dollars in property taxes when the next generation of family members acquires ownership.  Please refer to articles on property taxes located in the “Blog” section and under the “Resources” tab of this website.