Estate Planning

Estate planning with a family cottage

Family cottages often provide great memories — sweet memories of languid days in the sunshine…

Keeping the family cottage in the family is the topic of many books and articles. No one has yet devised the perfect way to make sure that everyone in the family gets a fair share of the cottage. Professional advisors, at various times, suggest joint ownership, corporate ownership, and trust ownership. Each has its merits and each is suitable in the right circumstances. You can do these things during your lifetime or in your Will.

Family cottages can be a great source of problems

In a recent article, I wrote for the Edmonton Journal, I wrote about the problems that family cottages can create in estate planning. Despite the best of intentions, I’ve seen cottages create big family fights. The problem is that the cottage can be a trigger for powerful emotions and longstanding family memories. That being said, the motivation for planning is typically driven by finances, taxation, and money. This disconnect between emotions and logic will often create a no-win situation.

When it comes to estate planning, money can be easily divided into many different ways. It’s often the things that can’t be divided that create fights like mom’s wedding ring, the old grandfather clock that’s been passed down multiple generations and yes, even the family cottage.

Three things to do when planning the future of the cottage

When it comes to estate planning with cottages, consider three very important things to do:

1. Start communicating. Far too often people assume they know what others want. My first suggestion is not to assume. Instead, talk to every member of your family that is involved and find out what their interest is in the cottage. If you are one of these family members, you may want to initiate a family discussion. Sometimes these discussions can be tough but they often need to happen to get to the right solution. If these talks don’t happen then problems may come at the end anyway but I’ve seen too many family relationships destroyed by poor planning or lack of planning.

Related article: Communication is essential in estate planning

2. Create a plan for shared ownership. If you decide to have more than one family member share the cottage, then set up a plan that stipulates everything about the use and maintenance of the cottage. Here a few key things to think about in your agreement for use and maintenance:

  • Who wants to own the cottage?
  • Who wants to use the cottage?
  • How often does each family member want to use the cottage and when?
  • How are you going to create a fair system for determining when and how often someone can use the cottage
  • Will the cottage be sold or gifted?
  • If sold, who has the financial ability to pay?
  • What maintenance and ongoing costs will there be?
  • Who is going to do the work like paying bills, mowing the lawn, getting the place set for changing seasons, handyman issues, security, and cleaning?
  • Who has the financial ability to maintain the expenses and maintenance of the property?
  • What are the financial differences between potential family owners? If you have one beneficiary that is financially well off wanting renovations, new appliances, and more recreational toys, how will that affect another family member that is not as financially well off?

Can you imagine some of your family members having different answers to these questions? What if you include the thoughts of their spouses and children? What if you have family members that are very different in thoughts, values, beliefs and financial stages? Do divorce and blended families play a role in planning?

3. Get professional advice. Cottages can be wonderful for a lot of reasons but when it comes to estate planning and trying to figure out what to do with the property as you age, it’s critically important to do some planning. When in doubt, get help. Good planning will probably involve a team of professionals including a lawyer, accountant, and financial advisor. Remember, there is no such thing as a universal cookie-cutter solution to estate planning with cottages so take a little time to plan it right.

Related article: Online guide to working with financial advisors

For more information on Estate Planning in Canada, Smart Tips on Estate Planning is a great resource to help you plan effectively. You can find it in paperback and Kindle formats on Amazon.


  1. Dave Rahman

    Hi Jim,

    I am thinking about becoming a legal permanent resident of the USA and as a result would have to file US income tax returns. Being a canadian citizen, working and residing in Canada at this time, how would this affect me tax wise. Filing both US and Canadian income taxes.

  2. Financial Planning Guy

    Don’t forget to create a plan to ensure there is enough liquidity in the estate to pay the tax bill on transfer.

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