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Passing your vacation home to your kids needs an attorney

If you own a vacation cottage that the grandkids enjoy coming to, there may be some decisions you need to make about your estate. They love coming to the cabin and watching them jump into the lake fills you with happiness. Leaving this vacation getaway to your kids may trigger a huge tax bill if you aren't careful.

Getting an attorney involved in your estate planning early can be a real game-changer. For instance, that cottage that you purchased for a few thousand dollars way back when is now worth several hundreds of thousands of dollars now.

You can't avoid paying taxes on it any more than your inheritors can, but there are things you can do now that make a big difference.

Selling your property to your children now or gifting it to them while you are still here can bring that tax debt down to a manageable level. Any future capital gains will be put in your kids' hands even though this action will trigger a tax bill now.

Although it may feel wrong, putting that tax bill in your children's hands may be the best idea. Dealing with the tax amount now, rather than later, puts your children in a much better position.

If you feel like you need to loan them the money to purchase the property, you can even do that. This frees you up to hold the mortgage and spreading the capital gains associated with the tax bill. You can even put a clause in your will that frees them of the debt.

Having an attorney who knows all about the laws and regulations of estate administration is something that you may need at a time like this. Dealing with this now, while you can, will free your kids up to grieve their loss.

Are you beginning to see that there are many options available to you? Calling in an experienced and knowledgeable attorney can make a big difference at a time like this.

Source: The Canadian Press, "Passing your cottage to the kids?," Craig Wong, June 04, 2015

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