One of the most difficult assets to deal with is the family cottage when it comes to estate planning. When you think about it, the cottage may contain years of memories, children growing from toddlers to teens and then adults. The view, the serenity and the all the good times…no wonder it is hard to contemplate what will happen to this vision of Shangri La when one passes away. However, the family cottage needs careful attention when making an estate plan.
All those great memories are precisely why it is difficult to deal with or even contemplate a sale prior to death or at death. If a sale is not done, what will happen to the cottage? Here are some of the questions that often arise when cottage planning involves family members:
• Will the cottage have to be sold?
• If the cottage will not be sold what family members will be taking it over?
• Who will show on the title of the cottage?
• Will some family members wish to buy out other family members?
• What are the tax ramifications of a sale at death or prior to death? Has there been planning for any tax liability that may arise?
• If the cottage is to remain in the family who will pay for repairs and maintenance? Will there have to be a trust set up to deal with ongoing costs and payment?
• Will everyone be able to agree on what type of maintenance is necessary and if not, how will the conflict be resolved?
• How will a schedule for use be done and what if there is disagreement?
And the list goes on and on. All of these questions can lead to family disputes. How will these disputes be resolved? Can the family sit down together prior to a parent becoming incapacitated or dying and hash out these issues? Sitting down to discuss it is of course the ideal scenario and removes surprises but who will lead the discussion? Do mom and dad feel comfortable about leading that type of discussion and how will they deal with any conflict that may arise?
All of these are really important questions and tough to focus on. Feeling overwhelmed in starting the discussion is truly understandable. Seeking a person that can facilitate the discussion is probably a step in the right direction. A mediator can help you face this challenge by laying out a game plan and working through the discussion. Having no plan leaves it all up to chance which is not a great outcome – maybe it will work or maybe not! Entering into a discussion that can walk you through a process and keep you on track will lead to a plan that will help preserve the family’s most cherished asset.