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| Managing Our Legacy |
Structures for Success
06/01/2004
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When family-held land passes from one generation to the next, siblings and
cousins may have conflicting ideas about its best use. Those who live far away
may resent paying expenses on a weekend home they never use. Others may want to
sell it to free up cash for other investments. Still others may feel they will
lose an important piece of their family history if they develop it.
 The
inheritors often find they need governance structures that allow them to make
decisions effectively, and legal mechanisms that allow individuals seeking
liquidity to get it, without compromising the goals of others. Financial
advisors often recommend limited liability companies and, somewhat less
frequently, family limited partnerships to achieve these dual aims.
Both
structures formalize each inheritor’s ownership stake in the land along with
decision-making rights. They provide mechanisms for parceling out responsibility
for expenses and for dividing up income or tax benefits. They also give family
members a way to sell their shares without breaking up the property—usually by
requiring the selling partner to give the others the right of first
refusal.
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