Avoiding Family Conflicts Over the Inherited Vacation Home

From our Podcast#38 Live Plan Invest with Estate Planning attorney Joe Donohue, recorded Monday, June 23, 2025.

There are few assets as emotionally rich—and potentially contentious—as the family vacation home. Whether it’s a lakeside cabin, a coastal cottage, or a mountain chalet, these properties hold generations of memories. But without proper planning, what starts as a cherished inheritance can become a source of friction and financial strain.

Take the story of the Murphy family, for example. In 1969, Patrick and Ann Murphy purchased a cabin on Pleasant Pond in Maine with the dream of it staying in the family for generations. Years later, they generously gifted equal shares to their seven children. That’s when the problems began.

With no formal structure in place, decisions about maintenance, budgeting, usage, and succession became flashpoints. Some family members lived nearby and shouldered the bulk of the labor. Others lived across the country and questioned the fairness of contributing equally to expenses. One sibling passed away unexpectedly with no estate plan, triggering lengthy probate in two states.

Eventually, the Murphy family did what many advisors recommend: they restructured ownership into an LLC, clearly defined governance rules, and ensured future succession through individual trusts. This thoughtful legal planning transformed their property from a potential liability into a lasting legacy.

So what can we learn from the Murphys?

1. Equal Shares ≠ Equal Commitment
Family members will have different levels of involvement and availability. A good structure accounts for this with rules for usage, labor compensation, and contributions based on ownership interest.

2. LLCs Provide Clarity and Protection
Unlike informal co-ownership, an LLC allows for democratic decision-making, liability protection, defined budgets, and automatic buyout provisions if someone becomes delinquent or wants to exit. It’s an ideal structure for large families or multi-generational properties.

3. Estate Planning Is Essential
Without trusts in place, a single unplanned death can cause costly and painful delays. Coordinating legal documents across state lines—and keeping property out of probate—saves time, money, and stress.

4. Sentimentality Needs Structure
Family cabins are built on love and memories—but sustained by legal clarity. From rules of conduct and maintenance schedules to seasonal reservations and succession plans, structure helps preserve harmony.

If your family shares a vacation property, or you’re considering leaving one to the next generation, now is the time to ensure your legacy doesn’t turn into a legal headache. Start with open conversations. Consult with a qualified estate attorney. And consider how structures like LLCs and trusts can provide flexibility, fairness, and long-term preservation.

As always, our team is here to help you navigate these personal yet complex planning decisions.

Vacation Property Planning Comparison: Trust vs LLC

Source : Donohue, O’Connell & Riley PLLC

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