If your family has a vacation property, chances are some of your best memories stem from summers devoted to watching your children splash in the waves, or your own parents calling you in after a long day of exploration.
A family cottage or other vacation property should be a place of happy memories, but it can also be the cause of many conflicts between relatives. When mom and dad pass on, who gets to keep the family sanctuary? Should it be sold? Should ownership be passed jointly to all children, or just one? What will it cost to keep it in the family?
Maybe daughter Jane uses the cottage the most, but her income is quite low; she will not be able to afford the taxes associated with receiving the cottage.
Perhaps her brother Bill is in a better financial situation and could afford the taxes, but never really liked the cottage and would rather sell, splitting the proceeds.
And maybe their sister Anne is trying to convince Mom and Dad to add her name to the ownership before they pass.
Succession planning is not as simple as a clause in a will: there are many factors that should be considered before a decision is made.
There will be taxes owing when the cottage is inherited – it is important to have an idea of what this cost will be, and who will be willing to pay it.
The family sanctuary can very quickly become the family battleground if owners are not proactive.
The best thing to do as the owner of a family vacation property is to speak with a financial advisor, sooner rather than later.
Discuss options and choose the best option for the family.
Submitted by Investors Group, Fergus
