Tag: 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
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.