For everyone who owns a Northern Michigan cottage at which their children and grandchildren have played on the beach in the summer and cross-country skied in the winter, it is an article of faith with the authenticity of the finger bone of a saint that the children and their children and their children ad infinitum will want to keep this place long after the death of the present generation and enjoy its many virtues. No amount of statistical evidence or appeals to commonsense can shake this fervent belief. The truth is that unless the cottage owners are obscenely wealthy and willing and able to match the property with its value in coin of the realm and sock them both away, ultimately the economics of the property ownership are going to create hardships for one or more of the persons whose contributions to its upkeep are needed and the cottage will swiftly become an elephant that they cannot afford to feed. Another problem associated with multi-generation beneficial interests in the cottage property is the need for someone to be in charge. Keeping a cottage going is after all an enterprise of sorts and not only must there be a minder for the finances, but someone must schedule the work bees and the periods of use. There are only 60 days of weather warm enough to go swimming and parceling out these precious days can be a source of serious teeth grinding.
We have attempted a balanced approach in the Cottage Trust for the needs for control and decision-making and the need for flexibility in bringing the Trust to an earlier end than the Settlor contemplated if things just don't work out right. We also need to provide for some initial funding in those cases where only a modest amount can be added to the Cottage Trust estate in the form of cash or securities to provide for the maintenance expenses. Please note that elsewhere in the Trust of the Settlor, the Cottage Trust is funded after taxes are paid with the real estate and the furniture, furnishings, and equipment of the cottage property along with cash or marketable securities in an amount equal to "X%" of the value of the cottage property. "X%" needs to be based upon what is anticipated will be the available assets for this purpose. Obviously, if the balance of the Trust Estate is to be paid over to the Settlor's children, they are going to feel themselves somewhat abused if a significant share of assets which would otherwise be divided among them is turned over to this Trust where it will be locked up for an extended period of time.
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