A family home is often at the center of estate planning efforts. But there are other large-scale assets that can often cause serious disputes and estate administration challenges in Ontario families. Cottages are one common asset that can cause discord among families. Here are some steps cottage owners can take to prevent conflict around this often beloved family asset.
The first consideration when estate planning with a cottage is to consider who will use the property. While equal co-ownership of an Ontario vacation property between children might seem to be the simplest solution, it can become complicated when one child uses the cottage significantly more than others. A child's location, vacation preferences and future plans should all be considered when planning for a cottage's succession.
Once this has been clarified, the next step is to figure out a formula for sharing the cottage. This includes sharing of the benefits, such as when different beneficiaries can use it. It also means sharing expenses, like property taxes and maintenance. Maintenance costs are once of the most commonly overlooked aspects of passing down a cottage, but making a clear agreement about this aspect of ownership is critical to avoiding future conflict. Similarly, a governance structure should be in place to simplify decision-making.
Overall, the seemingly easy solution of splitting vacation real estate equally amongst each child can end poorly when the practicalities of estate administration come into play. This arrangement can often lead to the sale of a family cottage or even estate litigation, regardless of how beloved the property might be to some beneficiaries. Involving an Ontario lawyer in both the planning and administration aspects of cottage succession is a good way to limit disputes and misunderstandings overall.