A third option is shared ownership with your children. Instead of being the sole owner, you and one or more of your children would own the cottage together, either as joint tenants or tenants-in-common. These two ways of sharing ownership are very different and the pros and cons of each need to be carefully considered before deciding which works best for you and your family.
As discussed in previous blogs, there is the question of taxation to consider. Capital gains would be payable on the percentage of the ownership that you transfer to the children.
Before transferring ownership, have a frank and open discussion with your children about cottage expenses, who will use it and when, how disputes will be settled and so on. Then you and your children should sign a co-ownership agreement which spells out what you’ve agreed to. It is far better to discuss such issues while you are the sole owner and have control. Head problems off before they arise and potentially damage relationships.
This option allows you to maintain an ownership interest while sharing the financial burden of cottage ownership. The downside, however, is that it does expose the cottage to potential claims by the creditors and/or spouses of your children. If you have concerns at all about a potential marriage break-up of a child, shared ownership may not be the best option for you.
Reproduction of this blog is permitted if the author is credited. If you have questions or if you would like more information, please call us at 613 836-9915. This blog is not intended to be legal advice but contains general information. Please consult a lawyer or other professional to determine how the information in this blog might apply to you.
Blog posts pre-dated December 1, 2015 were originally published under Neff Law Office Professional Corporation.
