Penning Group Blog

The Penning Group blog is written and edited by the advisors and attorneys of The Penning Group, providing practical business, personal, and legal information. To view blog posts by category, choose a topic area from the sidebar menu.

Thursday, October 10, 2013

Many of you have been there. You tell your children, “Please clean up your room” and get the response, “But I just cleaned it!”

This exchange is often the same source of frustration that commonly confronts families who own and use the family cottage. I often hear about “No matter how much I clean the cottage before leaving, my sister/brother will always find the speck of dust that I missed.” Or, my favorite, “I drove eight hours to the family cottage and arrived at midnight, and all I wanted to do was get into bed. When falling between the covers, I encountered dog hair, sand and a dead crayfish my sister’s Springer Spaniel left behind!” 

Everyone has different...

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Wednesday, October 2, 2013

When meeting with clients who are parents to discuss cottage law and succession planning with respect to their family cottage, I always begin with two basic questions: “Do your children want the cottage?” And, if the answer is “Yes,” “Can they afford it?”

The question to whether the children “want the cottage” may seem unnecessary, but given the priorities and expenses incurred by today’s younger generations, one cannot always assume acquiring ownership of the family cottage after Mom and Dad die is a priority for every child. Children have careers and get married. Those and other factors may take them to other locations around the country and even around the...

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Wednesday, September 25, 2013

One of the challenges I often encounter in my practice, particularly in cottage succession planning and family business situations, is that clients tend to focus on how things work in the present. They assume that present methods of management, problem-solving, payment of expenses, use of the family cottage and how ownership interest would be transferred will work the same way in the future. That is a risky assumption.

To expect that the next generation(s) of owners will maintain the same types of relationships, communication styles and cooperative efforts that the current generation enjoys is wishful thinking. That fact, together with factors that impact people’s lives such as...

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Wednesday, September 11, 2013

Insurance coverage is an important item to be addressed with respect to Cottage Law and Cottage Succession Planning. Every cottage has insurance to cover risks of loss due to damage of property and liability to individuals who may be injured on the premises. Insurance coverage is extremely important and, in most cases, is required by banks or lenders that hold the mortgage on a cottage or vacation property. So the question becomes, “What should an individual or family engaged in a cottage succession plan do with respect to their insurance coverage?”

The first thing to do is to contact your insurance agent and explain the type of succession plan you have chosen, so he/she...

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Wednesday, September 4, 2013

Transfers of Ownership and Property Tax Uncapping
As a general rule, when there is a transfer of title of property in Michigan, the value of the property is "uncapped" and increased for the assessment of property tax. This results in a significant increase of property taxes, oftentimes to the point that the next generation of new owners in a family cannot afford to keep the family cottage.

In the past two weeks, I’ve discussed in my weekly blogs two "exceptions" from the transfer of ownership rules.[1] These exceptions provide the opportunity for parents to transfer ownership of property to their children in...

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