The “lazy hazy” days of summer are here and many of us will be heading out to enjoy our favorite “home away from home” — the family cottage. For many, these properties represent the second largest financial investment we will make.
There is, however, an important difference between this property and your primary residence! Why? Because upon the death of you and your spouse that cottage will likely represent a significant tax liability to your heirs.
Successive changes to our tax laws, especially since 1982, has made it vital for owners of family cottages to plan for the disposal of this precious asset in the most tax efficient manner possible. Interestingly, life insurance can be a very cost-effective method of providing liquid cash to pay any capital gains. Or, consideration can be given to transferring the cottage to an ‘inter-vivos’ (living) trust.