Florida vacation home LLCs are used by people from all over the U.S. when owning property in Florida, as it’s a wonderful place to spend time off regardless of the season.
Like all real estate, a vacation property should be included in an estate plan. This is where things get unique.
Vacation homes are not like residential properties. The children of the owner may not have the same desire to use it as their parents did, or their siblings. Somehow, the descendants will have to share its use and maintain it responsibly.
So how do you avoid conflicts, confusion and upset? (While keeping that vacation home as good as it once was?) The answer may be an LLC.
Table of Contents
- What is a Florida Vacation Home LLC?
- Florida Vacation Home LLC Operating Agreements
- How to Form a Vacation Home LLC in Florida
- Other Vacation Home Ownership Options in Florida
- Protecting Your Vacation Home
- Contact our Residential Real Estate Attorney in Riverview and St. Petersburg, Florida
What is a Florida Vacation Home LLC?
A vacation home LLC is a type of business used by vacation homeowners so they can pass down their property and benefit from liabilities related to the property. Using the LLC, a family can detail how the property can be used and how it is managed.
The Benefits of a Florida Vacation Home LLC
- Family owners are protected from liability, so they can avoid the risks not covered by a standard homeowner’s insurance policy.
- Vacation Home LLCs include a written operating agreement with instructions on how the property should be shared and maintained after the owner’s death.
- The owners can transfer their membership interest in the LLC to their living trust, avoiding probate.
Florida Vacation Home LLC Operating Agreements
Like a regular LLC, a vacation home LLC is dictated by its operating agreement.
An operating agreement is a contractual agreement that details the terms of the company, so its members know how to manage it. This includes the management of the vacation home for future generations.
When creating a vacation home LLC in Florida, the operating agreement can cover:
- When each family member can use the vacation home.
- Who pays for the expenses (maintenance, taxes, utilities)?
- Who has the authority to sell or remodel the home?
- What rules are there for guests and pets?
- How should the property be cleaned or decorated?
- Can the property be rented out to others?
- What happens if one family member wants to use the vacation home, and the others want to sell it?
- What should happen to the interest of a family member-owner if gets divorced?
- How should any ownership disputes be resolved?
- What happens if the home suffers damage?
Naturally, some decisions can’t be strictly followed by an operating agreement. Unforeseen issues may arise. In these scenarios, the members of the LLC can vote on vacation home decisions. Or, the LLC creator can appoint LLC members as LLC managers so they have higher authority. An operating agreement can also allow a non-family member to oversee family disputes.
Read Related: Reasons To Hire A Real Estate Attorney
How to Form a Vacation Home LLC in Florida
Starting a vacation home LLC in Florida is achieved similarly to starting a regular LLC. You will need to:
- Choose an LLC name
- Get a registered agent
- Draft an LLC operating agreement
- File Articles of Organization
- Get an EIN
- File annual reports
It’s advised that you complete these steps with the assistance of our Florida business formation lawyers, to avoid making costly mistakes. We will ensure you meet all the necessary regulations and formal requirements, so your vacation property is safe for generations to come
Read Related: How to Start an LLC in Florida
Other Vacation Home Ownership Options in Florida
Vacation Home Partnership Options
Another ownership option for a family vacation home is through a ‘family limited partnership’.
- Individual limited partners are protected from liability for uninsured claims.
- General partners can protect themselves by filing an election with the State of Florida (to be treated as an LLC partnership).
- State filing fees for limited partnerships are higher than for LLCs, so most families opt for an LLC vacation home.
Vacation Home Trusts
Alternatively, the owner of a vacation home in Florida can gift the property.
- To do this, it can be placed in a vacation home trust (a type of irrevocable trust).
- When the owner passes away, the beneficiaries of the trust would gain the benefits of the property.
- Once they pass away, their descendants would also become beneficiaries.
- Another benefit of a trust is that the agreement allows you to customize the guidelines and terms. So, the property is managed in the best interests of the beneficiaries and potentially sold at a predetermined date or milestone.
- A trustee can oversee the management and a trust protector can be appointed to mediate family disputes.
- A customized trust agreement would provide guidelines for the shared use and ongoing maintenance of the family vacation home. A trust protector can be appointed to mediate family disagreements.
The downside is that the trustee is at risk of liability. If someone makes an uninsured claim on the family vacation home, the trustee may be personally liable.
Finally, trust agreements usually prevent beneficiaries from having power over trust management, so if you’d like to give your children authority over the property, then a Florida vacation home LLC may be the best option.
Protecting Your Vacation Home
- All these types of Florida vacation home options provide asset protection for the decedent’s interest in the property (if a creditor has a civil judgment against the individual heir).
- In Florida, the law prevents a creditor’s judgment from taking the descendant’s interest in the family vacation home LLC.
- Florida law prevents creditors from placing liens on distributions from the LLC, onto the family members.
Contact our Residential Real Estate Attorney in Riverview and St. Petersburg, Florida
If you want to own a Florida vacation home LLC, then our Florida residential real estate attorneys are here to help. Our law firm also has a business and LLC lawyer team that can assist as necessary to ensure your ownership is optimized.
If you’re purchasing a new home in St Petersburg, Florida then contact us today. Our attorneys, Ross and Purdun at Battaglia, Ross, Dicus & McQuaid, P.A. have extensive experience that can help you secure your first home without any hiccups.