BMO Nesbitt Burns
1 First Canadian Place
38th floor, P.O. Box 150
How to keep the cottage in the family
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:
To Learn More
- 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.
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