Everyone loves a summer/winter cottage. They’re all fun and games until disputes arise among family members as to how the cottage should be passed down through the family when the cottage owner passes away.
This is why proper succession planning is crucial if you are a cottage owner. Ensuring you have a Will that specifically mentions what happens with the family cottage when you pass away helps to ensure the cottage gets passed down to your family in the most fair and seamless way.
Options For Passing On A Family Cottage
If you or someone you know is wondering how to pass on the family cottage, this article focuses on two different ways a cottage can be dealt with in your Will.
OPTION 1: A Cottage Trust
You could set up a separate trust specifically for the family cottage in your Will. This would allow your estate to hold the family cottage in a trust for a number of years following your death. At the end of that period, the family cottage can either be sold on the market, distributed among your family members, or sold to your family members.
If you set up a family cottage trust during your lifetime, your estate may avoid paying the estate administration tax that would otherwise be payable on the fair market value of the family cottage assessed on the date of your death.
OPTION 2: A Right of First Refusal
Another option is to set up a mechanism in your Will to allow the sale of the family cottage, at fair market value, to a particular family member of yours. If that family member does not want the family cottage, they may offer it up to another family member.
As the cottage owner, you may wish to allow for a reduction in the purchase price if a family member chooses to buy the cottage.
Before choosing one of the above options, there a number of considerations you may wish to first discuss with your legal & financial advisors and family members.
Aside from the legal and financial considerations involved with transferring a family cottage, there may be emotionally-motivated considerations, especially where multiple family members have fond memories of their time spent at the family cottage. For those reasons, we often recommend planning ahead with your family before proceeding with one of the above options.
You may wish to consider having an honest conversation with your family members during a family meeting to ensure the transfer of the family cottage will be as fair as possible.
Let Us Help
This article was meant to scratch the surface of different options available to cottage owners.
At Hummingbird Lawyers LLP, our Wills & Estates Lawyers are experienced and successful in assisting cottage owners, as they consider the best way to pass on the family cottage to their family members. If you or someone you know is wondering how to deal with a family cottage, our Wills & Estates Lawyers would be happy to help.
Call us today or fill out the form below for more information.