Passing on the family cottage

Jumping off the dock in the noonday sun, paddling a canoe in the late evening alongside the loons: your cottage is more than just equity property — it’s a lifetime of family memories for you and your children.

Still, in many parts of the country, prices for waterfront recreational properties have risen at least as dramatically as city residences. Deciding the future of your cottage should address both the sentimental and the financial realities.

Succession planning is a critical part of your estate plan and there are a number of unique legal requirements for you to consider. When it comes to this type of planning, knowing everyone’s view makes the process flow smoothly.

Your children may feel awkward broaching the subject of who gets the cottage, so you should take the initiative. It boils down to one question: Do your children want the cottage?

With that in mind, it’s easier to start at the end and work back to a solution. Ask yourself what you want to accomplish with your estate overall; who would you like to benefit from it? Then ask what role the cottage plays in that context.

For many kids, the cottage holds more cherished memories than event the family’s principal residence. Much more than any other single investment, it’s often a part of who they are. The trick is to ensure that sentiment doesn’t turn into stress when the time comes to make a decision.

Many parents deal with the cottage in their will without having a discussion with their kids. Equally often, their adult children assume it’s easier to deal with the cottage after the reading of the will than to take the risk of upsetting parents by divulging their lack of interest.

You want to treat your children fairly in dividing up the estate, including the family cottage. But you need to consider whether some children have done better financially, and whether all of them can equally afford the upkeep costs.

What happens if there are six children who will share the cottage? What happens if some of your children live far away and rarely visit Canada? It’s important to understand that treating your children fairly may not mean treating them equally.

You may be concerned about your children’s lack of experience managing investments, but are reluctant to say so. Or you could have concerns about your children’s ability to agree on the need for and payment of big-ticket items such as a new roof or the financial realities of carrying the expenses on a cottage for 12 months of the year – not just for July and August.

A conversation now, saves hassles later. Bring the family together and have this important chat.