Scotia Private Client Group expert offers advice to keep the family
cottage a peaceful place
TORONTO, May 16 /CNW/ - Handing down the family cottage can be
financially and emotionally challenging without a succession plan in
place to deal with the questions and conflicts that often emerge. As
cottage season approaches, Scotia Private Client Group offers advice on
how to avoid a difficult scenario for your family and your funds.
"The dream of inheriting a cottage can cause conflict among family
members if there isn't a succession plan in place to divide or share
the property," says Elaine Blades, Director for Estate and Trust
Products & Services, Scotia Private Client Group. "Too often people
simply put directions in their will about who should inherit the family
cottage and assume things will work out, but sadly, that's not always
Families face numerous issues when dealing with succession planning.
With geographical distances between them, socio-economical differences
or complex family relationships, each family member has a different
stake or interest in the family cottage. Dividing the cottage equally
may seem fair, but it is not necessarily the best solution for all
involved. For instance, one sibling may live out-of-province or
overseas and therefore rarely use the cottage. There may be a new
in-law who doesn't share the emotional stake and would be just as happy
to sell. Or, all siblings may enjoy the benefits of the cottage but
can't come to an agreement on who gets to use it when, who pays for
what, and who is ultimately responsible for it.
Every stakeholder has his or her own view on what is best or right. To
help avoid conflict, Ms. Blades recommends families meet to openly
discuss everyone's interests, outline the ideal outcome and work
backwards from there.
"When it comes to the cottage, family members are emotional stakeholders
so it's important to plan for the 'soft' family issues and the 'hard'
financial issues," adds Ms. Blades. "There are a myriad of scenarios
and options to think about and an estate planner can help anticipate
the issues and advise on how to help get you there. An expert's
impartiality will also allow for the most practical and flexible
solutions - as well as many more family memories to cherish."
Everyone has heard stories about family conflicts that can develop from
inheriting a cottage. The best way to avoid them is to plan ahead.
According to estate litigator, Justin de Vries, Principal of de VRIES
LITIGATION, "Estate litigation is increasing exponentially, and
disputes over the cottage can be one of the most volatile and
destructive. If a cottage property dispute ends up in court, it usually
results in a family torn apart, costs to the estate, costs to the
parties, and the cottage sitting empty until the litigation is
resolved. This is not the legacy parents want to leave behind. The best
advice I can give is talk to your children. Plan now and plan often to
avoid family heartache in the future."
In order to avoid legal implications, Ms. Blades advises cottage owners
to talk to their children now and develop a plan. It may be a difficult
conversation to have but it is much easier to have a clear
understanding of everyone's expectations in advance, and advance
planning enables parents to consider the financial implications within
their overall estate plan.
Other Financial Considerations for Cottage Succession Planning
While family dynamics are often the most important consideration when
planning the future of the cottage, the unknowns and potential financial implications can also be daunting and
are an important consideration as part of a family plan. Here are some
topics to consider during planning:
Unexpected costs can be significant including probate fees, capital
gains tax, and land transfer tax. Are these applicable?
Gifting now, bequeathing, or selling to the kids - what's the best
course for all concerned?
What's the best legal structure? Joint title (joint tenancy or tenants
in common), sole ownership, held in trust?
How can you treat the kids "fairly" when not all have an interest in
and/or the ability to enjoy the cottage? Fairly does not always
translate into equally.
Insurance strategies - what are they and what role can they play?
Availability of principal residence exemption - how does this work and
what are the tax implications?
Seeking out expert advice, exploring options and engaging family in the
discussion can all help to ensure memories of the family cottage
continue to be happy ones.
About Scotia Private Client Group:
Scotia Private Client Group provides customized solutions to help high
net worth clients build, preserve and transfer their wealth. Scotia
Private Client Group consists of private client services from The Bank
of Nova Scotia, The Bank of Nova Scotia Trust Company, Scotia Asset
Management L.P., Scotia Asset Management U.S. Inc., ScotiaMcLeod
Financial Services Inc., and ScotiaMcLeod®, a division of Scotia
Capital Inc. Scotia Capital Inc. is a member of the Investment Industry
Regulatory Organization of Canada and the Canadian Investor Protection
Fund. Scotia Private Client Group is a registered business name of The
Bank of Nova Scotia, The Bank of Nova Scotia Trust Company,
ScotiaMcLeod Financial Services Inc., Scotia Asset Management L.P., and
Scotia Capital Inc. in the jurisdictions in which they carry on
business. Estate and succession planning services are provided by The
Bank of Nova Scotia Trust Company. For more information, please visit www.scotiaprivateclientgroup.com.
For further information:
Tara Wood, Narrative Advocacy Media, (416) 644-4133, firstname.lastname@example.org