Tag: co-ownership agreement
Cherished, memories, generational, and cozy, are just some of the words that evoke the magnificence that is the family cottage. It is this magnificence that leads many families to want to hold on to the family cottage as part of their estate plan. This is not always easy though, and the family cottage is often the centrerpiece of an estate dispute. As such, careful planning is key.
Those that want the cottage to stay in the family should consider a co-ownership agreement. The purpose of these types of agreements are to set out the governance of the cottage to ensure it is maintained and disputes are resolved.
Some of the key terms to consider in a co-ownership agreement include:
- how basic expenses will be covered, including hydro, telephone, maintenance, and property taxes;
- how extraordinary expenses, including capital expenses, are to be paid;
- when payments are to be made and to whom;
- which family members are allowed to occupy the cottage, and when;
- are guests permitted;
- should there be a management committee charged with making certain decisions;
- what mechanisms should be used to resolve disputes;
- the procedure for the sale or transfer by a co-owner; and
- what happens upon the death of a co-owner.
If the Kardashians can teach us anything about estate planning (and you know that given the title, there had to be a Kardashian reference), it is that family dynamics are in flux. New relationships emerge, siblings develop different values and beliefs, and sometimes, problems arise. A good co-ownership agreement is not cookie-cutter, but a carefully crafted document reflecting the uniqueness of each family member that can evolve over time.
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Yesterday, I attended the Trusts and Estates conference at the Ontario Bar Association’s 2007 Annual Institute of Continuing Legal Education. The conference was entitled, “Gone…But Not Forgotten.” Hull and Hull LLP’s Craig Vander Zee co-chaired the event, which featured lectures presented by leading practitioners in estate law.
As the title of the conference may suggest, topics included geriatric care, consent and capacity matters, guardianship issues, estate planning techniques, as well as developments in the law of trusts and trustee liability, solicitor’s negligence and charity law.
Two of the lecturers offered an interesting discussion on the various ways the family cottage may be transferred from parents to children and the estate planning implications of each technique.
One particularly interesting practice that was discussed is the use of a co-ownership agreement.
Essentially, a co-ownership agreement allows parents and children to amicably share the family cottage during the parents’ lifetimes, and also creates a structure for the future use of the cottage after the parents pass away. While co-ownership agreements are not without problems, if drafted correctly, they may address certain issues that typically arise with family cottages; namely, tax implications, the cost of repairs and maintenance, who gets to use the cottage and most importantly, when. These issues and are often the subject of family battles and can result in litigation.
Whether a co-ownership agreement is appropriate depends on the circumstances of the estate in question. There are many other estate planning tools available for transferring the family cottage, which have their own advantages.
Thanks for reading.