As we move along with the topic “Will planning – no simple task”, another circumstance that may require you to give special attention is ownership of a family cottage.
Many people own not only a residence in which they principally reside but also a summer cottage as well. It is not uncommon to find that while the principal home has the greater value, it does not evoke the same emotional sentiment as the cottage property. Often the cottage property will cause the greatest of difficulties for the beneficiaries.
Often there is such an emotional attachment to the family cottage that addressing its disposition becomes fraught with difficulty. Sometimes, however, it is the case that there is a perceived emotional attachment on the part of parents in terms of the wants of their children. No where is it perhaps more paramount for a family to sit down and have a frank discussion about what’s going to happen to an asset after the parents pass away than with respect to the family cottage. Many a family have ended up in conflict over the family cottage. It is one asset where careful consideration should be paid while the parents are still alive.
If you own a family cottage, some of the issues which you might want to consider with respect to its disposition include:
- Who uses the cottage property? If not all of your intended beneficiaries use the family cottage then consider addressing this in your Will through other gifts.
- Should there be an option in one of the beneficiaries to acquire the cottage as part of his or her share? If so, how should the value be determined? How should the option process proceed?
- Should the cottage property be held in trust for successive generations to use? If so, how are expenses to be paid? Should there be a separate fund set aside to cover expenses? How should use of the cottage be shared? How will the income tax liability that will occur on the 21st anniversary be addressed? When will the trust be wound up and who will benefit at that time?
- If the cottage property is going to be co-owned, should there be a direction that there be a co-owners agreement?
- Can everyone who wants an interest in the cottage afford to maintain it? If not, are there other assets to assist in this regard? If not, does this mandate that the cottage is to be sold?
These are but a few of the issues to consider when planning for the family cottage. Stay tuned for consideration of other complexities in your Will planning.
Corina S. Weigl