Insight

The Family Cottage and Estate Planning

The Family Cottage and Estate Planning

Ted Mann

Ted Mann

August 11, 2021 03:47 PM

Few issues in estate planning cause a greater gnashing of teeth than trying to deal with the family cottage: cottages can carry with them the best of memories, the strongest of emotional attachments, and the potential for the biggest battles, when it comes to succession planning. Clients often don’t like dealing with their cottages specifically, usually because they cannot see shared ownership as working, and they don’t want to have to ‘make a choice’ amongst the children as to who is going to get the cottage. Not dealing with the cottage, however, is a much worse choice than dealing with it specifically. Parents have the legal and moral authority to determine how the cottage is to be dealt with amongst the children, and by doing so, can save the children from conflict later on.

The problem becomes more of an issue if ‘the family cottage’ is the family cottage from the family of one of the spouses only, who owns the cottage alone with other family members, and not with their spouse.

The following is a sample of the issues to be kept in mind when dealing with cottages:

Capital Gains Tax

Where the cottage has not been the principal residence for the title-holder, there is capital gains tax applicable where the property does not pass to the surviving spouse. This is a problem both where the property is owned by a surviving spouse who dies, and where the property is passing from a spouse directly to children or siblings. The issue of how the tax is to be paid, and who should pay it, should be taken into account when doing an estate plan – and should be in the will, along with the instructions as to who is to inherit the cottage.

If Only One Child is to Inherit

Where you choose to leave the cottage to only one child, it is important to consider how to correct the imbalance amongst the children, all of whom you presumably wish to inherit equally. It is often said that inheriting property is not as advantageous as inheriting money – some thought can be given to discounting the value of the cottage for the purposes of including that value in calculating the distribution to the child getting the cottage.

If Multiple Children Inherit

It is possible to dictate an agreement that the children must sign in order to inherit a share, that deals with cottage ownership issues: use of the cottage, sharing of expenses, sale of an interest, inheriting of an interest, etc.

These are just a few of the issues that we explore when working with clients to develop an estate plan involving a cottage. It is important to specifically discuss the cottage with your lawyer when discussing an estate plan – good planning now has the potential of saving conflict amongst your family down the road.

This blog post was written by Ted Mann, a Partner in the Wills and Estates, Real Estate, Business and Bankruptcy teams. He can be reached at 613-369-0368 or at ted.mann@mannlawyers.com.

Related Articles

Meeting Halfway


by Julia B. Meister

To resolve family and business disputes including wills, trusts, estates and more, mediation is often a more effective, gentler and cheaper option than litigation.

Mediation to Resolve Wills, Trusts, Estates

The New PPE


by Jennifer Stavros

How to plan your pandemic preparedness estate—all from the safety of home.

Planning Your Digital Estate Plan

Protecting Your Legacy With Estate Planning


by Tripp Wiles

You're careful with your finances; do you still need asset protection?

Protecting Your Legacy With Estate Planning

Is It Time for You to Have the Long-Term Care Planning Talk With Your Parents?


by Anthony J. Enea

How should you talk to your parents about long-term care options? Estate planning can make for a difficult conversation, but wills and trusts are necessary documents for anyone growing older.

Estate Planning for Parents Guide

Most Americans Lack a Power of Attorney for Assets


by George M. Riter

Only 25 percent of American households have estate planning documents in place. A Power of Attorney for Assets will secure your financial affairs should you be unable to do so yourself.

Power of Attorney for Assets Documents

Trending Articles

The Real Camille: An Interview with Johnny Depp’s Lawyer Camille Vasquez


by Rebecca Blackwell

Camille Vasquez, a young lawyer at Brown Rudnick, sat down with Best Lawyers CEO Phillip Greer to talk about her distinguished career, recently being named partner and what comes next for her.

Camille Vasquez in office

Johnny Depp and Amber Heard: The Best Lawyers Honorees Behind the Litigation


by Gregory Sirico

Best Lawyers takes a look at the recognized legal talent representing Johnny Depp and Amber Heard in their ongoing defamation trial.

Lawyers for Johnny Depp and Amber Heard

Announcing The Best Lawyers in The United Kingdom™ 2023


by Best Lawyers

The results include an elite field of top lawyers and firms from the United Kingdom.

The Best Lawyers in The United Kingdom 2023

Announcing The Best Lawyers in France™ 2023


by Best Lawyers

The results include an elite field of top lawyers and firms from France.

Blue, white and red strips

Announcing The Best Lawyers in Germany™ 2023


by Best Lawyers

The results include an elite field of top lawyers and firms from Germany.

Black, red and yellow stripes

Education by Trial: Cultivating Legal Expertise in the Courtroom


by Margo Pierce

The intricacies of complex lawsuits require extensive knowledge of the legal precedent. But they also demand a high level of skill in every discipline needed to succeed at trial, such as analyzing technical reports and deposing expert witnesses.

Cultivating Legal Expertise in the Courtroom

Announcing the 2022 Best Lawyers® in the United States


by Best Lawyers

The results include an elite field of top lawyers listed in the 28th Edition of The Best Lawyers in America® and in the 2nd Edition of Best Lawyers: Ones to Watch in America for 2022.

2022 Best Lawyers Listings for United States

Announcing The Best Lawyers in Belgium™ 2023


by Best Lawyers

The results include an elite field of top lawyers and firms from Belgium.

Black, yellow and red stripes

Announcing the 2022 Best Lawyers™ in France


by Best Lawyers

The results include an elite field of top lawyers and firms, including our inaugural Best Lawyers: Ones to Watch recipients.

Announcing the 2022 Best Lawyers™ in France

We Are Women, We Are Fearless


by Deborah S. Chang and Justin Smulison

Athea Trial Lawyers is a female owned and operated law firm specializing in civil litigation, catastrophic energy, wrongful death and product liability.

Athea Trial Law Female Leadership and Success

Choosing a Title Company: What a Seller Should Expect


by Roy D. Oppenheim

When it comes to choosing a title company, how much power exactly does a seller have?

Choosing the Title Company As Seller

Announcing the 2022 Best Lawyers™ in Germany


by Best Lawyers

The results include an elite field of top lawyers and firms, including our inaugural Best Lawyers: Ones to Watch recipients.

Announcing the 2022 Best Lawyers™ in Germany

What If Johnny Depp and Amber Heard Had a Premarital Agreement?


by John M. Goralka

Oh, the gritty details we’re learning from the latest court battle between Johnny Depp and Amber Heard. This unfortunate airing of dirty laundry may have been avoided with a prenup. Should you think about getting one yourself?

What If Johnny Depp & Amber Heard Had Prenup?

U.K. Introduces Revisions to Right-to-Work Scheme and Immigration Rules


by Gregory Sirico

Right-to-Work Scheme and Immigration Rules in

Destiny Fulfilled


by Sara Collin

Was Angela Reddock-Wright destined to become a lawyer? It sure seems that way. Yet her path was circuitous. This accomplished employment attorney, turned mediator, arbitrator and ADR specialist nonpareil discusses her career, the role of attorneys in society, the new world of post-pandemic work and why new Supreme Court Justice Ketanji Brown Jackson represents the future.

Interview with Lawyer Angela Reddock-Wright

What the Courts Say About Recording in the Classroom


by Christina Henagen Peer and Peter Zawadski

Students and parents are increasingly asking to use audio devices to record what's being said in the classroom. But is it legal? A recent ruling offer gives the answer to a question confusing parents and administrators alike.

Is It Legal for Students to Record Teachers?