Tag: family cottage
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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The holiday season is upon us, and with it comes family gatherings, buying and wrapping gifts, and travel. Suffice to say, it can be a hectic and busy time. Nonetheless, with 2018 on the horizon, many of us take the time to reflect and set resolutions for the upcoming year. Despite this, so many Canadians do not have a Will.
Why not? Estate planning need not be trying, and the holiday season is a perfect time to start considering your estate plan.
With this in mind, I thought I would highlight an article from the Globe and Mail which does a great job of highlighting issues to get you thinking about your estate plan:
- Get started – make a detailed list of your assets, liabilities, and joint assets, and think about your family’s needs and lifestyle.
- Consider your options – do you want your bequests to be absolute, subject to the terms of a trust, or gifted during your lifetime?
- Appoint representatives – think about who you trust to administer your estate and ensure that they are up for the job.
- Special circumstances – are there any beneficiaries who have special circumstances such as those receiving ODSP, that would benefit from specific trusts?
- Taxation – meet with a professional to understand tax consequences and the vehicles available to limit the payment of taxes, including the use of joint ownership and estate freezes.
- Cottages – should your estate involve the cherished family cottage, think about whether you want it sold, or shared amongst family members. If the latter, think about preparing a co-ownership agreement.
Wishing all of our readers a happy New Year!
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With the spring flowers beginning their bloom, and the warm weather slowly settling in, many Canadians turn their attention to summer plans at the cottage. With this in mind, I thought it would be apropos to consider estate planning and the family cottage.
How to best plan for the family cottage is a question I hear all of the time.
At the outset, according to this Globe and Mail article, it is important to consider whether you want to keep the family cottage in the family at all.
If the answer is yes, there are numerous estate planning vehicles available in order to transfer the cottage. As discussed in this prior Hull & Hull LLP blog, some options include making a specific bequest in a Will, where it can be left to certain beneficiaries who would receive the cottage absolutely and do with it as they please. Alternatively, should you wish to impose limitations on what the beneficiaries can (or cannot) do with the cottage, a testamentary or inter vivos trust may be more appropriate.
Of course, any decision should consider the tax implications. A prior Hull & Hull LLP podcast, found here, highlights the different options for dealing with capital gains tax in relation to the cottage.
Clearly, there are many options available and professional advice should be sought. Doing nothing is rarely a good idea. Look no further than the decision of Cowderoy v. Sorkos Estate, where a lengthy dispute ensued over whether the deceased had sufficiently transferred a farm and cottage.
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Listen to Delegation in Investment Accounts
This week on Hull on Estate and Succession Planning, Ian and Suzana discuss delegation issues that arise when dealing with Investment Accounts and address a listeners question about the family cottage.
Listen to "Drafting a Co-ownership Agreement"
Read the transcribed version of "Drafting a Co-Ownership Agreement"
This week on Hull on Estate and Succession Planning, Ian and Suzana discuss things to remember when drafting a co-ownership agreement of a recreational property with family or friends.
Click "Continue Reading" to read the transcribed version of this podcast.
Listen to "Arranging an Agreement on Cottage Property"
Read the transcribed version of "Arranging an Agreement on Cottage Property"
This week on Hull on Estate and Succession Planning, Ian and Suzana continue talking about cottage and recreational properties.
Listen to "Family Cottage Cases of Ownership Transfers"
Read the transcribed version of "Family Cottage Cases of Ownership Transfers"
In this week’s episode of Hull on Estate and Succession Planning, Ian and Suzana share a few stories involving cases of ownership and the family cottage.
Listen to "The Family Cottage and Capital Gains Taxes"
Read the transcribed version of "The Family Cottage and Capital Gains Taxes"
This week on Hull on Estate and Succession Planning, Ian and Suzana discuss different options for dealing with capital gains tax as it pertains to investments like ‘The family cottage’.
Listen to "Capital Gains Taxes"
Read the transcribed version of "Capital Gainst Taxes"
In this week’s episode of Hull on Estate and Succession Planning, Ian and Suzana talk about capital gains taxes and what you need to know about them relating to the family cottage.
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