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Planning for the future: your Italian holiday home

Italian holiday homeMany people own a holiday or second home in Italy. If you want to keep your Italian holiday home in the family for future generations, it is advisable, ideally as part of your overall estate plan, to look at how best to manage this. Failing to take the right steps to ensure a home’s future ownership can lead to family upsets and disputes after your death.

A holiday home can hold powerful sentimental value; understandably, many couples want to leave their holiday home to their children as a way of preserving memories of happy family holidays.

However, in wanting to pass on the house, many overlook a critical step: finding out whether family members actually want it.

For heirs, practical issues might include:

  • how far they’ll have to travel to visit the home
  • whether their income can support regular travel to the home
  • maintenance, taxes, and other associated costs.

Then there’s another factor: your Italian holiday home may constitute a major part of your children’s inheritance. Some of your children might actually prefer, or need, a more liquid asset.

If your children would like to keep the property in the family, the simplest method is to leave the property outright in your Will to the particular children, or family members, you wish to inherit it. Your estate plan would include provisions that transfer the deed to your heirs, and each of your heirs will own an equal portion.

But what’s simple for you may bring complexities for your heirs — and, in some cases, cause resentment. Equal ownership means all the owners would have a say in every decision concerning the home — when each can use it, whether to rent it out, whether to sell it and for what price, and what projects need to be undertaken to keep the property in good order; each owner bears an equal responsibility to pay for all the running costs associated with the home.

There will be day-to-day management issues. If the house is being rented out, who screens tenants, collects the rent, and calls an electrician or a plumber when there are problems? And, sooner or later, decisions will have to be made about major maintenance and repairs. What happens if the property needs a new roof for example? Siblings may not always agree about the need to invest such substantial sums of money in the house.

Even if your heirs decide to keep the holiday home, they may run into problems in the future. Financial situations might change. What happens if one of your heirs becomes unemployed, incapacitated or bankrupt or a divorce creates a change in financial circumstances? Any of these events could force a sale of the property.

Finally, at some point your heirs will need to decide how the house fits into their own estate planning. Should it be passed to the next generation, and if so, what’s the best way to handle that? You need to consider that as time passes, your heirs’ families may grow, leaving more descendants to share the home, each for less time per person each year. In the longer term, many of the descendants will be related to each other only distantly so co-ownership may become even more problematic.

Planning to pass on a holiday home to your family is a great way to ensure that future generations have the opportunity to enjoy it. However, it’s important to consider all the aspects and take steps to assess whether it is in fact the right thing for your family to inherit, and how it would be cared for over the years.

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