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Estate planning and the family cottage

Many British Columbia residents and others across the nation enjoy vacation time and wonderful memories spent at family cottages. Part of the responsibility of owning a getaway home includes knowing when it's time to sell the property or turn over ownership to an heir. Tax considerations generally mean that a person should transfer the property after they retire because their income will decrease. However, in some cases, family members aren't invested in the property and do not want to take it over when the older generation dies. In such situations, it might be best to sell the property.

One financial advisor recommends that the owner assess the situation with a more objective eye. Instead of including the property in their wills, they might decide to put it on the market in the best interests of all parties. 

Sometimes, the estate holder will choose to pass the property to only one heir. If this occurs, other family members might feel excluded, which could cause intense emotions to surface. In other cases, the parties might not have the financial wherewithal to maintain the property. They will need to pay property taxes on it, which could be a huge financial drain.

One solution is through making other financial arrangements for managing the property such as a sale from the estate to the future owner. While families sometimes opt to leave a cottage in the estate for all the members to share, the related costs and sharing of the home could quickly sap the joy out of owning it. In some cases, the vacation home has fallen into a state of disrepair due to lack of proper maintenance.

Handling a family cottage during estate planning can be a major challenge. An estate lawyer might offer solutions on ways to address the issue that are in the best interests of the involved parties.

Source: CTV News, "Financial advice: Say goodbye to family cottage before it's too late ", David Friend, June 19, 2014

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