Is this the year you finally got that beach house or mountain cabin you've always wanted?

Maybe right now you're sitting on the porch watching the kids play in the late-summer sun and dreaming of the day when you'll be sitting there with your kids watching their kids in joyful frolic.

Such dreams are common among owners of vacation property, but making them come true is far more difficult than many owners realize, experts say. Passing such property from generation to generation, while keeping both the property and the family intact, involves not only the usual questions of economic fairness, but often must also resolve intense emotional issues.

"It is such a hard topic. Even the families that have done it successfully, I've spoken to them later and there've been some glitches," said Wendy S. Goffe, an attorney with Graham & Dunn in Seattle.

And that's the success stories. In other cases, Goffe said, she hears comments like, "I got out and now I'm watching my three siblings kill each other."

Further, people in older resort areas say the problems get worse with each passing generation, not least because the number of heirs -- and in-laws -- grows larger and larger.

But with vacation property becoming ever more scarce and expensive, there are also ever-stronger incentives for families to make the transition work.

Experts point to three key hurdles that they see as keys to success in keeping a beach house, country place or other property in the family.

First, the family needs to decide who in the younger generation will get the property. Sometimes such questions are easy -- there are two children, and one has moved to Australia, say, or has struck it rich and bought a place he or she likes better. Then it becomes mainly a matter of working out an estate plan for the older generation that is economically fair.

But more often, both or all of the kids have some degree of interest in the place. In those cases, experts recommend long, in-depth -- and repeated -- family conversations about what kind of arrangement would be regarded as fair. In the case of a well-to-do family and an expensive property, it may be worth bringing in a third party, such as a trained facilitator, who could elicit family members' real feelings and desires about the property.

The idea is to understand family members' expectations about the place. Do they want it at all? Maybe they don't and the best thing to do is sell it. But people should do their best to be certain about this. In communities close to old resort areas, such as Upstate New York or along the Great Lakes, where cottages and cabins sometimes date back to the 19th century, it's common to hear people ruing the day when Mom and Dad or Grandma and Grandpa sold off the cottage on the lake or river.

If they want to keep it, do they see it as primarily a family place, used only by close relatives? If so, do they envision the younger generation's families using it together or at separate times? On the other hand, do they foresee only occasional family use, and opening the place to outsiders, such as friends or even renters?

These views are important, because the goal is to devise a master plan that will be the basis for other decisions, including solutions to the second hurdle -- choosing the legal mechanism to transfer the property.

In making this second choice it is best to have professional assistance. Getting this step right is key to minimizing taxes and to making sure that the agreed-upon master plan is followed.

Simply bequeathing the property to the younger generation sounds invitingly easy -- and it is, if the property is going to only one child, and if estate taxes are not a concern. A bequest within an estate small enough to escape estate taxes -- an estate valued at less than $1.5 million this year and $2 million next year -- is not only untaxed but also under current law receives a "stepped-up basis," meaning that if the heir sells the property, only the appreciation, if any, over its value at the time of the older generation's death is subject to capital gains tax.

But waiting until the older generation's death keeps appreciation in that generation's estate, possibly creating tax problems. And leaving several children undivided interests sets up potential problems at the next generational transfer.

Professionals can offer a number of strategies to minimize taxes and clarify ownership and use rights in later years.

In some cases, making a gift of the property, or of interests in it, will be deemed advisable. Gifts during the lifetime of the older generation do not qualify for the stepped-up basis, but they do shift subsequent appreciation out of the older generation's estate.

A variety of trust strategies are also possible. With many states repealing the rules against eternal or very long-term trusts, some form of irrevocable trust can be used to avoid estate taxes for future generations. But Goffe cautioned that irrevocable trusts tend to be inflexible, and may prove excessively restrictive later on.

There is also a device called a qualified personal residence trust that can have tax advantages by allowing the property to be given to the younger generation at a reduced value while allowing the older folks to live in it for a period of years. These trusts are technical, however, and have drawbacks, such as that the older people must move out or pay rent at the end of the predetermined term, so they should be examined carefully.

Increasingly popular today are family limited liability companies or family limited partnerships. These are quite flexible, and allow interests to be given as gifts to the younger generation. Such gifts may qualify for various discounts of tax purposes, and may qualify for the annual gift tax exclusion ($11,000 this year, and expected to rise to $12,000 next year).

An LLC or FLP can be helpful in clearing the final hurdle, which is managing the property during and after its transfer to the next generation. For example, Mom and Dad can continue to manage it at first, even as a major share of the ownership shifts to the kids.

But whatever the form of the transfer, family members should have an agreement -- a formal written agreement is best -- on how the property is to be managed. This should include such things as schedules of use; rules on use by outsiders, including whether it may be rented; rules on maintenance and repairs; and rules on how these and other costs, such as taxes and insurance, should be paid.

The agreement may also specify if or how a family member can sell his or her interest. Can it be sold to outsiders? Does the rest of the family have right of first refusal? What happens in case of a divorce?

This may seem like a lot of trouble, and it is. But obtaining a clear understanding of family members' wishes, then choosing the strategy that best carries them out, will, over time, save even more trouble. Not to mention a lot of heartbreak.

Good news and bad news from the Employee Benefit Research Institute about retirement plans and pensions. The good news is that 63 percent of employees in 2003 age 16 or older worked for an employer that sponsored a retirement plan, up from 60 percent in 1998. Further, the participation rate climbed to 48 percent from 44 percent during that period.

The bad news is that traditional pensions continued to slip and defined-contribution plans, such as the 401(k), in which workers bear the investment risk, continued to rise. Defined-contribution plans were the primary retirement plan of 57.7 percent of participants, up from 51.5 percent in 1998. Traditional plans were primary for 40.5 percent of participants in 2003, down from 46.3 in 1998 and 56.7 in 1988, EBRI said.