For many families, the vacation home holds an almost sacred place in the heart—where toddlers became teens, where holidays meant fireflies, fireworks or fireplaces, and where generations gathered without the distractions of daily life. But behind the memories, there’s a practical truth: someone has to pay for the propane. And the insurance. And the dock repairs.
When Mom and Dad first bought the place, they likely never imagined the complexity of passing it down. They might have casually said, “This will always stay in the family,” without realizing how complicated “always” can become. Over time, what begins as a gift can turn into a burden—or worse, a battleground—unless the structure is set up with care and foresight.
Enter the LLC and RLT
This is where a limited liability company (LLC) and revocable living trust (RLT) can play a powerful role in the family legacy. Not just for the tax-savvy or litigation-wary, the LLC and RLT combination serves as a steady decision-maker—giving parents clear control while they’re alive and providing structure and guidance for their children after they’re gone. It’s not just a tool; it’s the rulebook.
In many families, parents simply believe that their kids will “figure it out.” But verbal agreements don’t pay for snow removal or determine who gets the master bedroom over the 4th of July weekend.
Instead, consider placing the vacation property into an LLC for asset protection and centralized management, then have the RLT own the LLC by holding the membership interest. This structure allows the parents—as trustees of the trust and managers of the LLC—to retain full control while they’re alive. After their passing, the successor trustee steps in to manage the trust’s ownership of the LLC, ensuring a smooth transition without probate. The vacation home remains under consistent rules and oversight, providing continuity and reducing the potential for conflict among heirs.
Protecting the Peace—Now and Later
Parents don’t need to wait until their twilight years to put the home in an LLC. Doing it early helps them manage the home under a formal structure but still allows them to enjoy it with their children. They can fund the LLC or the accompanying RLT with enough money to cover ongoing costs—like taxes, repairs, insurance, or replacing the old pontoon boat—so that the children aren’t immediately faced with writing checks after their parents are gone.
And when that time comes, nothing really changes—because the rules have already been established. The LLC manager and RLT trustee roles pass to the people the parents designated. No group emails about who’s in charge. No debates about how often the roof should be inspected. The manager and trustee decide.
Insurance, Liability, and Sibling Rivalry
An often-overlooked benefit? The LLC provides legal separation between family members and the risks tied to the property. If someone gets injured on the dock or crashes the jet ski, the liability belongs to the LLC, not an individual sibling.
And because the LLC owns everything—not just the lake house, but the furniture, the vehicles, the toys—the agreement outlines who’s responsible for what. It can include schedules for use, rules for repairs, and even set expectations around selling personal property. That way, no one’s arguing over Grandpa’s old fishing gear or whether the snowmobiles should be kept or sold.
The Real Legacy
In the end, this isn’t just about protecting a cabin or a cottage. It’s about protecting relationships and family fun. It’s about ensuring that the emotional value of the place lives on, unmarred by logistical confusion or resentment. A well-structured LLC and RLT combination allows parents to hand down not just a property, but a way to share it fairly and sustainably. The same rules apply while they’re here to enjoy it—and remain in place when they’re gone.
So if a vacation home is where your family comes together, make sure it stays that way. Let the LLC and RLT decide.