Cottage Succession Planning


Who will inherit the Cottage?

As you prepare for summer at your cottage, will you spend as much time there as you want to? Will you get your money’s worth? Have you done the math?

Enjoying the pleasures of your cottage certainly brings with it some economic consequences.

So, what will happen to it when you are not able to look after the vacation property, or what will happen to it after you’re not here?

Preparing Your Estate Plan

When preparing your estate plan, it is essential to plan for the transfer of your cottage or vacation home. Without a careful cottage succession plan in place, your cottage could put a significant financial and emotional burden on your family and become a foundation for family conflict.

If you own a cottage, no doubt it’s one of your favorite places to be with your family, but it also represents one of your biggest estate planning challenges. Much as you love vacations at the lake, determining who will eventually take over the place after you pass on will almost certainly be a worried experience.


Tax liability is often regarded as the predominant issue in cottage succession planning. However, it is certainly not the only one. If you do decide to transfer the cottage to one or more children, there are several ways to accomplish this:


  • Transfer to a Trust or Corporation
  • Joint ownership (JTWROS)
  • Sell the cottage to your children during your lifetime
  • Passing the property under your will
  • Gifting



There have been numerous tax strategies suggested over the years to reduce or defer tax liability on the transfer of the cottage.  The most common strategies are:


  • Use life insurance to pay the tax liability – A life insurance policy can be purchased on the life of the owner of the cottage.
  • Joint ownership-Holding property in joint ownership is a way to manage the transfer of legal title on death without having an estate involved.
  • Use the principal residence exemption (PRE) to eliminate the tax liability on the cottage. It may be possible to use your PRE to shelter a gain from tax, whether during your lifetime or upon death.
  • Maximize the ACB – The higher the adjusted cost base on the transfer of your cottage means a lower capital gain and lower taxes on disposition.


Your Keybase Advisor can work with you to help you understand the best options for cottage succession planning, such as transferring your cottage or vacation home to your beneficiaries, during your lifetime or on death.


The information contained herein has been   provided   by   Keybase   and   is   for   information   purposes   only. Clients and prospective clients should always read a product prospectus and fully understand all of the risks associated with the product before purchasing. The comments included in the publication are not intended to be a definitive analysis of tax law. Any information relating to the discussion of taxation issues is considered to be only general in nature. Clients should seek a qualified tax professional to discuss their specific tax requirements.”

Keybase Financial Group Inc. is a member of the MFDA and is a member of the MFDA IPC.