by Mary Intven Wallace
| Our cottage is a treasured place where three generations of family enjoy the peace and beauty of the Algonquin Highlands. We all love it there: swimming in the clear water; breathing the fresh forest air; stargazing on clear nights; exploring the lakes, rivers, and trails all round us. After entering my 7th decade, I began to think about our family’s cottage future. I wanted to pass this inheritance on to my children and grandchildren. There were many questions: What happens in the case of serious illness or sudden death? How can the Capital Gains tax liability be managed? What if a child’s marriage breakdown forces the sale to meet the financial demands of divorce? How can I accommodate the differing needs, interests, incomes, and expectations of my children? At one of our Cottage association annual meetings, I attended a presentation given by Peter Lillico, a lawyer from Peterborough Ontario, who has lots of experience in cottage succession planning. After discussing the issue with my children, we decided that we would go ahead with transferring ownership of the cottage under the guidance of Mr. Lillico. He was able to address all our questions and concerns. The first step was for each of my four adult children to fill out a worksheet that included ideas about their vision for the future of the Cottage, responsibilities they’re willing to take on, how to share usage, how decisions will be made, and how expenses will be paid, etc. Peter put together this information into a preliminary Cottage sharing agreement for our discussion. A few changes were made, and everyone agreed on a final version. Going forward we have a guideline for how all will cooperate as co-owners of the cottage. Next, we had to decide the mechanism by which we would pass along the cottage. We had a real estate assessment done to estimate capital gains tax. Peter suggested a variety of options. We took some time to look at our options and made a decision of how to complete the transfer. This spring, the transfer has been completed. We are happy with the outcome and we trust that our cottage will continue to be used and enjoyed by the next generation. *Peterborough-based estate lawyer Peter Lillico has a Cottage Succession presentation available on the Lillico Bazuk Galloway Halka website. *Recordings of his workshops can also be purchased through the Federation of Ontario Cottage Associations. |