Who gets the ski cottage? How rich Americans give homes to their children without causing feuds.

• Rich Americans want their mansions to stay in the family without causing sibling strife.
• They can use trusts to dictate how their heirs can use the family home and who pays for what.
• These wealthy homeowners can save on estate taxes at the same time.

In a survey conducted by Ameriprise in 2022, nearly seven out of 10 respondents said they planned to leave real estate to their heirs, but more than half of them said they hadn't told their heirs about it.

Even among rich heirs, passing on real estate without proper planning can lead to sibling strife. Who gets the Hamptons house for July 4? What if one sibling wants to renovate the Aspen chalet and the others don't want to split the cost?

"You have to start by recognizing that the family home or the vacation home is more than a financial asset. It is deeply personal," Adam Ludman, the head of tax advisory at JPMorgan Private Bank, told Business Insider.

Instead of leaving thorny questions up to the kids, parents can control how the property will be managed after they die. They can gift the home using a trust that includes enough cash to maintain it. (If done before death, this can save on taxes, too, Ludman said.) Their chosen trustee looks after the property's finances and, if the parents wish, has the power to sell or transfer the home under certain conditions.

Parents can also use operating agreements to allocate holidays to each sibling and control whether the home can be used for family weddings. They can even stipulate which types of property damage the trust will pay to fix if a family member is responsible. Operating agreements can go into exacting detail, but Ludman said it's important to leave some control up to the heirs.

"They can be granular, but they also need enough flexibility so the operation of the home is not overly restricted," he said. "Families obviously evolve and expand, and circumstances can change."

When equal isn't equitable

Parents often assume their adult children will share the property equally after they pass, Ludman said. But they should talk to their children — and possibly their partners — to assess their preferences.

"Does each of them have the same attachment to the home?" he said. "Will they continue to use it with the same regularity? Will they be able to share equally in the expenses of the home?"

He added that one of the most common dilemmas is having children with different incomes. Perhaps two of three adult heirs are wealthier than the third, who doesn't want to share the burden of property tax and other costs. The parents can account for this by putting funds in the trusts to cover their costs. Alternatively, they can put a buyout provision in the operating agreement that dictates how the two siblings can acquire the third's stake.

While Ludman encourages allowing the heirs some control, it's important to have a decision-maker in case the siblings reach a stalemate. The trustee can make the final call on issues like repairs, renovations, or even whether to sell the property.

Some parents prefer to give their children more power. Rather than using operating agreements, they can write a "letter of wishes," Ludman said. This document is not legally binding but indicates how the parents would like the property to be used.

He described this as an important time for transferring homes and other assets. Married couples can give away $27.22 million in assets without incurring the 40% federal estate tax. That exemption is due to expire at the end of 2025, but it looks likely that it will be extended given the Republican Party's control of Washington.