Should Parents Pay $10K a Year for a Cabin They Gifted Their Child?

## The Dilemma

A parent wrote to a financial advice column with a tricky family money question. They gave one of their adult children a summer cabin as a gift — but the property is now costing about $10,000 a year in taxes and insurance, plus it has serious structural problems.

The parents wonder: should the child pay these costs now that they own the cabin, or should the family's money cover it?

## The Family Setup

Here are the key facts:

• Child #1 received a northern summer cabin, used only 3-4 months a year, costing nearly $10,000/year to maintain.
• Child #2 received land they live on year-round, plus a small rental cabin that *earns* about $10,000/year.
• Both gifts are roughly equal in value.
• A trust (a legal arrangement that holds and passes on assets) will eventually split the parents' inheritance 50/50.

The columnist's simple rule: "If you are given it, you pay for it." Owning property means owning its costs. Paying their own way teaches children financial responsibility and avoids a sense of entitlement.

But he admits reality is messier. If the cabin is a heavy burden, the parents could:

• Advise the child to sell it.
• Cover the shortfall, but deduct those costs from the child's future inheritance.
• Have the child rent out the cabin part-time to cover the bills.

The article raises an important point: gifting property while alive removes a tax break called the step-up in basis (a rule that resets a property's taxable value to its current market price when inherited — lowering future capital gains tax).

Key tax facts mentioned:

• Inheritances are not taxed as income at the U.S. federal level.
• A few states charge an inheritance tax, though children often get exemptions.
• An irrevocable trust (one that can't be changed) avoids probate (the slow court process of distributing an estate) and can shield assets from estate tax.

The bottom line: gifts come with responsibilities. Parents balancing fairness, family harmony, and good money habits should weigh costs carefully — and consider taxes *before* giving property away.

This is an AI-generated summary. Read the original article at: https://www.marketwatch.com/story/my-child-was-given-a-summer-cabin-should-i-pay-for-the-10-000-a-year-maintenance-and-taxes-5dc5cace?mod=mw_rss_topstories