As the warmer months approach, many Canadians are heading to their cherished summer retreats—lakefront cottages, mountain cabins, or vacation homes. While these properties hold deep sentimental value and offer a welcome escape for families, they can also present estate planning challenges if not properly addressed.
For wealthy Canadians, recreational properties often represent more than just leisure—they are legacy assets. Thoughtful planning is essential to ensure these properties remain in the family for generations to come.
The Hidden Costs of Sentiment
Passing a vacation property to the next generation without a clear plan can lead to unintended tax consequences and family conflict. In Canada, recreational properties are subject to capital gains tax on any increase in value at the time of transfer or upon death. Without proper planning, heirs could be left with a significant tax bill—one they may not be financially prepared to manage.
Planning Strategies to Consider
- Use of Trusts: Placing a recreational property in a trust can allow for smoother succession and help manage capital gains exposure.
- Corporate Ownership: In certain cases, a holding company may provide tax advantages or creditor protection.
- Co-Ownership Agreements: If multiple heirs will share the property, setting clear expectations through a formal agreement can help prevent future disputes.
- Life Insurance: A well-structured life insurance policy can provide the liquidity needed to cover tax liabilities upon death, helping preserve the property for future generations.
Don’t Leave It to Chance
An effective estate plan ensures your wishes are carried out, taxes are minimized, and family harmony is maintained. If you currently own a recreational property—or are considering purchasing one—now is the time to ensure your estate plan is in order.
Want to Learn More?
We invite you to join our upcoming estate planning webinar on Thursday, May 29th at 6:30 PM MT. During this informative session, you'll learn practical strategies to protect your family assets, reduce tax burdens, and preserve your legacy.
Whether you already own a recreational property or are planning to buy one, this webinar will help you make informed decisions about its future. Register here Seminars.
