The Family Cottage – Deciding How It’s Transferred
Yesterday I blogged about deciding who to leave your cottage to in your Will. Today I thought I would discuss 3 different ways of transferring the cottage.
By Specific Bequest
The most obvious way is to make a specific bequest of it in your Will, leaving it to a named beneficiary (or beneficiaries who will own it jointly). The beneficiaries will receive direct ownership of the property and it will be theirs absolutely, do use as they please.
If there will be multiple beneficiaries, you should give some thought to whether you would like them to receive the cottage as joint-tenants or tenants in common – this will affect what happens to the cottage on the death of one of the beneficiaries. If you think you would like them to own the property jointly, then this will need to be taken care of at the planning stage.
By Testamentary Trust
Another option is to leave the cottage in a trust – in which case you would designate how long the trust is to remain in existence and who the ultimate beneficiaries would be.
This option is useful if you would like your spouse to continue to have use of the cottage during his or her lifetime, but would then like it to go to your children. This option also allows you to put conditions on the term of ownership as well as to provide for the continued maintenance of the cottage.
By Inter Vivos Trust
This option involves transferring the cottage into a trust for the beneficiaries during your lifetime. The advantages of this option are that your estate won’t have to pay probate fees or taxes on the
property after your death. On the other hand, you may trigger tax liability while you are alive.
Different options will work for different people – if you have a cottage, this is definitely a topic you should discuss with an estate planning expert.
Thanks for reading!
Megan F. Connolly