Anne Cutler

Estate Disposition Lead, Advice Lab

Amy Richards

Executive Director, Advice Lab Specialist

When they were young, Molly’s parents purchased a vacation home on Lake Michigan. Molly, an only child, spent many happy summers there while growing up. She loved her summer friends and the time she spent there with her parents. It was the special place where she brought her future husband to meet her parents. Later, she and her husband spent many happy vacations there with their young family, which, within 10 years, included four children. Eventually, Molly inherited the house, and years later, she retired there with her husband. Their four adult children, all living in the Chicago area, visited often, bringing boyfriends and girlfriends, and eventually, spouses and their own children. The family especially treasured their Fourth of July celebrations there together.

Molly and her husband loved this home and saw it as the family’s gathering place. As part of their estate planning, they were careful to leave the house to their four children equally and outright.

The vacation home was older, which was part of its charm. But like many old houses, it needed regular maintenance and some costly repairs from time to time.

From treasured retreat to source of strain

Over time, one of Molly’s four children moved to California, and since he was unlikely to use the house often, he didn’t want to foot those bills. That sibling eventually asked the three others to buy him out of his share. Two of his siblings thought that was a great idea and had the money to buy him out. The third sibling couldn’t afford the buyout plan – and didn’t want to own a smaller share of the house than the other two.

The reluctant sibling was already nursing some hurt feelings. She lived nearby and used the house regularly, but because she was single, she often ended up in the smallest, loudest bedroom near the kitchen, even though she was an equal partner in ownership.

In hindsight, while Molly and her husband understood the importance of estate planning, their approach to gifting the house could have been better. As in so many families, unforeseen circumstances made it difficult for the children to enjoy the house equally. Over time, disagreements led to some ill will among the children, and the house no longer served as a joyful family hub.

While no plan can account for every eventuality, some of the changes that affected Molly’s family are not uncommon. A well-thought-out plan can address many of these, increasing the chances that a vacation home remains a place of relaxation and family togetherness.

The importance of estate planning

If you want to leave real estate to your children and possibly your grandchildren, we’d recommend these steps:

  • Begin with a candid conversation. This should include your children and, if you are comfortable doing so, any partners or spouses. Describe your vision for the future of the vacation home and gauge their enthusiasm and commitment to your plans.
  • Consider selling the house. You may find it useful to do a full cost-benefit analysis of keeping the vacation home. You’ll want to consider hard costs such as maintenance, repairs and any renovations. Also weigh the emotional costs and benefits. Remember that the sale does not have to happen immediately. You can sell the house during your lifetime, of course, or have it sold at your death.
  • You could put the house into a trust directing that it be sold at the end of a specific timeframe, or upon a majority decision made by your children or descendants. Keeping the home in the family but in a trust requires drafting at least two agreements: a trust agreement that names a trustee and, ideally, provides liquid assets to maintain the home, and an operating agreement made among your heirs that guides the use, maintenance and perhaps sale of the home.

It is critically important that both the trust agreement and the operating agreement be drafted for flexibility. Usually, trusts are drafted for the benefit of “descendants” or “children and their descendants” without giving priority to any particular generation. This can cause disagreements as the family grows and each family member is allotted less time to use the house.

Crafting a trust agreement

The trustee is charged with caring for the house. You may want to choose an independent, professional (non-family) trustee, particularly if the trust is designed to last for multiple generations.

The trust agreement can also prevent the house from becoming a financial burden. If you’re able, leave enough money in the trust to pay for the property’s maintenance (this would include an estimate for taxes) and repairs. The trust agreement should also lay out the conditions, if any, that would allow your descendants to transfer ownership of the house.

If you don’t want your children to be able to transfer their interest in the house, you can stipulate that in the trust. That way, one child cannot ask to be bought out and their siblings won’t be put in the difficult position of having to agree to or deny the request.

Alternatively, if you do want to allow the children to buy each other out, you could stipulate that a third party must value the property, and/or account for the possibility that a share in the house might be sold to a non-family member.

It’s best not to burden the trustee with a detailed laundry list of instructions that they’re bound to follow. Instead, you can provide a non-binding letter of wishes. This can put forth general suggestions and inform trustees of your values and intentions. Importantly, you can update a letter of wishes during your life from time to time if circumstances change among your children.

Planning in advance with an operating agreement

The second helpful document is an operating agreement that details how the house will be run. An operating agreement, agreed to by each of the children, can lay out guidelines and expectations that help prevent disagreements.

Here are some of the issues that might be covered in an operating agreement:

  • Time at the property – The operating agreement can allocate time – including holiday weekends – among family members or branches.
  • Other uses – This addresses the potential use of the property for charity events or family weddings, the ability of family members to host non-family in the house and any rental of the property.
  • Maintenance responsibilities – Who opens the home for the season and who shuts it down? Who inspects the property and winterizes it? Will there be a paid third-party property manager? The trustee can become liable if the property is not adequately maintained, but typically, family members don’t want the trustee to coordinate repairs.
  • Renovations – These can be a touchy topic, and generational divides (“it’s fine” versus “it’s way out-of-date”) are common. Of the three children who used Molly’s house regularly, one did not have the money to renovate. The other two could afford it, but they didn’t agree on what those renovations should look like.
  • Substantial damage – Some wear and tear is normal and to be expected. But if the house sustains damage beyond that, who should pay for it? The trust or the responsible family member?

When preparing to leave a beloved vacation home to your children, it may be difficult to consider all the potential sources of disagreement around such a thoughtful gift. But proper planning can help ensure that your vacation home remains a place of joy and togetherness, and that your children, as well as future family members, can enjoy it to the fullest.

We can help

Determining the future of a vacation home takes time and forethought. Your J.P. Morgan advisor can help you explore your options, consider the relevant dynamics and lay the groundwork for the best possible outcome.

Connect with a Wealth Advisor

Our Wealth Advisors begin by getting to know you personally. To get started, tell us about your needs and we’ll reach out to you.

Connect now


This material is for informational purposes only, and may inform you of certain products and services offered by J.P. Morgan’s wealth management businesses, part of JPMorgan Chase & Co. (“JPM”). Products and services described, as well as associated fees, charges and interest rates, are subject to change in accordance with the applicable account agreements and may differ among geographic locations. Not all products and services are offered at all locations. If you are a person with a disability and need additional support accessing this material, please contact your J.P. Morgan team or email us at for assistance. Please read all Important Information.

Any views, strategies or products discussed in this material may not be appropriate for all individuals and are subject to risks. Investors may get back less than they invested, and past performance is not a reliable indicator of future results. Asset allocation/diversification does not guarantee a profit or protect against loss. Nothing in this material should be relied upon in isolation for the purpose of making an investment decision. You are urged to consider carefully whether the services, products, asset classes (e.g. equities, fixed income, alternative investments, commodities, etc.) or strategies discussed are suitable to your needs. You must also consider the objectives, risks, charges, and expenses associated with an investment service, product or strategy prior to making an investment decision. For this and more complete information, including discussion of your goals/situation, contact your J.P. Morgan representative.

NON-RELIANCECertain information contained in this material is believed to be reliable; however, JPM does not represent or warrant its accuracy, reliability or completeness, or accept any liability for any loss or damage (whether direct or indirect) arising out of the use of all or any part of this material. No representation or warranty should be made with regard to any computations, graphs, tables, diagrams or commentary in this material, which are provided for illustration/reference purposes only. The views, opinions, estimates and strategies expressed in this material constitute our judgment based on current market conditions and are subject to change without notice. JPM assumes no duty to update any information in this material in the event that such information changes. Views, opinions, estimates and strategies expressed herein may differ from those expressed by other areas of JPM, views expressed for other purposes or in other contexts, and this material should not be regarded as a research report. Any projected results and risks are based solely on hypothetical examples cited, and actual results and risks will vary depending on specific circumstances. Forward-looking statements should not be considered as guarantees or predictions of future events.

Nothing in this document shall be construed as giving rise to any duty of care owed to, or advisory relationship with, you or any third party. Nothing in this document shall be regarded as an offer, solicitation, recommendation or advice (whether financial, accounting, legal, tax or other) given by J.P. Morgan and/or its officers or employees, irrespective of whether or not such communication was given at your request. J.P. Morgan and its affiliates and employees do not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transactions.

Legal Entity and Regulatory Information.

J.P. Morgan Wealth Management is a business of JPMorgan Chase & Co., which offers investment products and services through J.P. Morgan Securities LLC (JPMS), a registered broker-dealer and investment adviser, member FINRA and SIPC. Insurance products are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. Certain custody and other services are provided by JPMorgan Chase Bank, N.A. (JPMCB). JPMS, CIA and JPMCB are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states.

Bank deposit accounts and related services, such as checking, savings and bank lending, are offered by JPMorgan Chase Bank, N.A. Member FDIC.

This document may provide information about the brokerage and investment advisory services provided by J.P. Morgan Securities LLC (“JPMS”). The agreements entered into with JPMS, and corresponding disclosures provided with respect to the different products and services provided by JPMS (including our Form ADV disclosure brochure, if and when applicable), contain important information about the capacity in which we will be acting. You should read them all carefully. We encourage clients to speak to their JPMS representative regarding the nature of the products and services and to ask any questions they may have about the difference between brokerage and investment advisory services, including the obligation to disclose conflicts of interests and to act in the best interests of our clients.

J.P. Morgan may hold a position for itself or our other clients which may not be consistent with the information, opinions, estimates, investment strategies or views expressed in this document.  JPMorgan Chase & Co. or its affiliates may hold a position or act as market maker in the financial instruments of any issuer discussed herein or act as an underwriter, placement agent, advisor or lender to such issuer.