How to keep the cottage in the family

Has your cottage appreciated in value? Will your estate be able to cover the tax liability? If not, your family may have to sell the property to pay the taxes. By planning ahead you can make sure your family can enjoy the cottage long after you’re gone. Here’s how:


  • Pay the tax now. You can choose to trigger the capital gain now by transferring the cottage to a family trust. Your family will have to pay the tax on any future gains in value (trust rules stipulate that property held in a trust is deemed to be disposed of every 21 years).
  • Set aside the funds to pay the tax later. Estimate the potential gain in value and establish a fund where you and/or your heirs deposit money to cover the future tax liability.
  • Cover the tax liability with life insurance. The tax-free death benefit from life insurance can be used to pay the tax due. For couples, second-to-die insurance may be an economical choice. The death benefit is paid after the second of the pair dies, exactly when the money is needed. Premiums may be lower since only one death benefit is paid on two lives.


To Learn More

Keeping the cottage in the family requires some careful pre-planning. To review the options for your family, I can introduce you to one of our Estate & Insurance Advisors. For more information or to discuss in more detail, please contact me directly: Stephen Mallett (416) 359-7591