First you need is to take your future concerns into some context. Things do change but a written solid financial plan will help with the direction. Will you need the equity from the property to appropriately retire? Please do not take my blogs word as anything more than my research on the subject, hire a professional the CRA (Canada Revenue Agency) does not joke around with our tax money actually they take it quite seriously.
A) Talk to the people who will be affected by the decision Do any of your kids want the property? how many of them? or would they want the cash settlement upon probate? Can your kids afford the taxes and maintenance on the property? Are your kids all over the country, will they all be able to share in the asset equally? If not is that an issue? will there be hurt feelings? These are key questions as feelings will be hurt and relationships decimated if not dealt with ahead of time.
B) Contact a financial advisor. A financial advisor can suggest a number of strategies to correct many of the problems associated with passing on a chalet, cottage or rural property. Depending on your needs, they will direct you to other professionals, such as an estate-planning lawyer or tax accountant that will help in determining the best approach.
1) My personal favorite strategy would be set up a life insurance policy to cover tax obligations as well as possibly paying out the siblings that don’t get or want the full utility of the property. The added bonus, is you can have them pay the premiums of the policy.
2) You can also designate your country home, cottage or chalet as your principle residence which is sheltered from capital gains to a point. This strategy could reduce the amount of taxes that would be paid by your estate. Make sure you get proper council, I personally always like to be firmly in the grey zone with the CRA, so make sure it works!
3) You could also consider putting the property into a living trust, this tactic is available to anyone over 65 years but is only sheltered for 21 years. So if you’re parents lived to 100 choose carefully as this method is more costly than a simple bequest.
4) One further option is to set up the property as a non profit organization where the members will pay dues that functions like a club. The initial property transfer will trigger a capital gain, but future use of the property will not incur capital gains or probate fees. This works well for large compounds, and when everyone is on board with similar future outlooks.
5) Finally have your gang draft a co-ownership agreement, that will detail how the property will be shared (expenses and use) hopefully creating a clear path preventing issues once you have moved on.
With any estate issue, careful planning can help assure your chalet, cottage or rural home will be enjoyed for generations to come. Send me a line if you need a professional Thanks