Article written by Jennifer Black and Dedicated Financial Solutions.
Our Vision – Keeping the cottage in the family or not?
Owning a second home or cottage creates more complex issues for your estate planning. Income taxes, market values, who wants to use the cottage and how to be fair to everyone are a few.
Here are a series of questions to ask when thinking about your cottage.
- How long do we think we will be able to continue to use the cottage?
- Do we want to continue to maintain the cottage? How expensive is the upkeep if we can’t do it ourselves?
- How far is it to drive from home to the cottage? Are we still comfortable making that drive?
- Do we have children or other family who also use the cottage?
- Are the other family members likely to continue to use the cottage even if we aren’t?
- Would all our children be interested in keeping the cottage? How can we be fair to everyone?
- What’s the value of the cottage today vs. what we paid for it?
- What is the most efficient way to transfer the cottage (today or at death).
- Can the kids afford to keep the cottage?
- If something were to happen to us what would the cost be for the taxes in order to keep the cottage?
- Would the kids be forced to sell the cottage because of high taxes owing?
- What can be done to minimize the taxes on capital gains on the cottage?
- Would we want to move to the cottage as our retirement residence?
- Are there medical facilities in the area close enough for comfort?
- What if we were no longer able to drive or live on our own, what is the potential next move to a retirement home or long term care facility?
- Would that be an option near the cottage or would we have to move back to a major city?Has the cottage appreciated more in value than our house? Should we be declaring it as our principal residence? That would mean that we should be declaring capital gains if we sell our house first.To start these discussions and get on the right path to a successful and family friendly cottage succession contact us today.
