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How to keep cottage transition from becoming an estate-planning mess

Start small by talking with adult children about maintenance, then move on to money and responsibility

As Canadians, a big part of our culture is spending our days outdoors enjoying this beautiful country. Many of us are lucky enough to be able to travel to our favourite “sides”: lakeside, oceanside, mountainside or countryside. Family offices that manage family wealth have many conversations with clients about vacation homes, most often about how to maintain them across generations.

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Although vacation properties usually make up a small percentage of a family’s net worth, they often dominate estate planning discussions due to the emotional aspects involved.

We often work with other advisors in developing solutions for vacation properties. For example, insurance advisors will typically recommend taking out joint-last-to-die policies to cover off capital gains taxes and provide liquidity for an estate; accountants will focus on calculating adjusted cost bases to ensure taxes are minimized; and lawyers can assist in drafting detailed plans for setting up a trust or other structure to maintain the asset for future generations.

Building a team of advisors to help develop the transition strategy is a key component of any cottage transition plan. Interestingly, although each advisor brings a different solution to cottage transitions, one aspect remains common within their advice: “Talk to your kids.”

Catastrophic stories of family cottage transitions that result in family disarray are all too common. We recently listened to a presentation by a litigation lawyer who spends significant time dealing with vacation properties, and his one piece of advice to parents was very straightforward — “sell the cottage before you die” and avoid future problems.

Although on paper this is the easiest solution, most families want to keep the cottage and make some form of transition to the next generation.

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Keeping the plan a mystery until wills are read gives a much higher probability of future challenges. Starting the conversation as soon as you believe your children are ready is the best way to prevent your family from becoming one of the disaster stories.

So where does one start in the discussion? There are many ways to begin, and each family is unique. However, trying to establish consistent and open communication amongst all family members is the key. We’ve found that cottage properties are a great conversation item for family meetings, and the conversation doesn’t have to start with discussing long term/estate plans. In addition, family members are often not in a stage in their lives to voice their long term wishes (or maybe even understand them).

A more effective way to break the ice is to start by working through some of the typical cottage owner decisions as a family. Often these items are also becoming a concern to parents (maintenance and usage, for instance).

Depending on the age and stage of your family members, we’ve found that focusing on a few of the topics below is a great way to start the conversation:


  • What will be done by the family, and what will be contracted?
  • Who will manage the contractors?
  • Who is responsible for tasks that will be completed by the family?
  • When should tasks be completed?


  • Should specific time be allocated to each family member?
  • If yes, how should it be divided? Shared use? Exclusive use?
  • What is the family policy on guests?
  • Should the family make an effort to host an annual weekend with all family members?
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  • What are the biggest priorities?
  • When should capital improvements be completed (i.e. install a new dock, repair the roof, purchase a new boat)?

Exploring these topics is also a great way for parents to see how the family will work together, and what the ultimate transition plan should be.

If a property will ultimately be transitioned to the next generation, taking the additional step of asking family members to make a financial contribution to the ongoing maintenance and/or capital investment while their parents are alive may be a good approach to help the next generation learn about the management and cost of caring for what are often complex properties.

Although parents are typically able to afford the ongoing requirements, getting financial commitment from the next generation is valuable. Contributions may not be equal depending on circumstances, but some form of individual financial commitment is a good step if it is expected that the cottage will be shared or owned by an individual family member in the future.

If a family wishes to adopt this approach, they must then focus on asking questions such as:

  • Who will be responsible for managing the overall cottage budget/financial plan (routine maintenance, capital spending)?
  • How much will each family member contribute?
  • Are all contributions to be equal?
  • What significant items can the budget afford?
  • Should a reserve/emergency fund be established?
  • Should a cottage bank account be created?
  • Who is responsible for paying for specific items?
  • How will major financial decisions be made?
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Starting a discussion about smaller, manageable tasks is a great step for parents and will often evolve into the more challenging conversations about estates and the ultimate cottage transition. Ideally, a blueprint for discussing issues will emerge.

In some cases this can lead to more formal documentation through a cottage agreement that outlines the family decisions on items such as usage, finances and the transition to future generations.

Over the summer, give some thought to how you might start the cottage discussion within your family. Enjoy your time in the country, by the lake, mountain or ocean, and consider how talking with your kids can help ensure that generations of your family will be able do the same.

Eric Weir, CFP, CFA, is responsible for client service and client investment management as executive vice president at Northwood Family Office in Toronto, which looks after the investments and integrated financial affairs of wealthy families with $10 million or more. Eric has an Honours Business Administration (HBA) degree from the Richard Ivey School of Business at the University of Western Ontario. Eric is a Certified Financial Planner (CFP) and holds the Chartered Financial Analyst (CFA) designation. He is a member of the Toronto CFA Society.
Eric Weir