Avoid the Fight for the Family Cottage

Avoid the Fight for the Family Cottage

Oftentimes, the idea of "estate planning" can seem overwhelming. However, estate planning at its most basic level is simply making decisions about who should receive your assets when you die and creating a plan that efficiently transfers ownership of the assets at the time of your death to your intended beneficiaries.

Cottage law is an extension of your estate plan. Most estate plans will address planning for incapacity, estate administration, asset distribution, taxation and other planning considerations. Just as an estate plan attempts to eliminate the administration uncertainties related to the property owner's incapacity and death, a cottage plan eliminates the complexities related to shared ownership.

Uncertainties in life and death can create problems, stress and conflicts within your family and can adversely impact the passing down of your family cottage. The practical goal in light of these likely complications of shared ownership is simple. Create a plan that protects the people you love, the place you love, and the life experiences and cottage memories you love.

Factors to Consider

Developing a cottage plan requires forethought and a long-range view. In doing so, cottage owners should involve the entire family in the planning process. In addition, cottage owners should confirm that each prospective new owner actually has an interest in becoming a cottage owner. Too many times, it is assumed that every child wants ownership. However, factors such as financial considerations, geographic distance and time can impact the desire to become an owner.

After it is determined which family members are interested in eventually sharing ownership of the cottage property, a detailed plan should be established to ensure an efficient transfer of ownership, either during lifetime or upon death of the owner. Finally, the plan should address important shared ownership considerations such as maintenance, cost sharing and budgeting, use, dispute resolution, creditor protection and other considerations relative to the specific family's situation and long-term plan.

Because prospective new cottage owners often have differing financial resources, family size, marital status and opinions, these differences must be considered while forming the cottage plan. If the plan fails to take these differences into account, chances are that conflict will arise, jeopardizing your best-laid plans for your heirs to peacefully share the family cottage.


Transfers of ownership of the family cottage can be done by a variety of methods. First, you can simply transfer ownership of a cottage to your family members by deed when you are still living. This method is an easy transaction at a low cost; however, this method provides little or no protection from creditors for claims, divorce of a new interest holder, and lacks methods for management of the cottage going forward.

Second, cottage trusts are another method of transferring ownership. While the cottage trust can be an excellent tool for laying out a roadmap of agreement between the new cottage interest holders, trusts can be inflexible and cumbersome when it comes to dispute resolution and property management. Finally, we oftentimes use limited liability companies (LLCs) in cottage planning. LLCs offer the benefit of perpetual existence, flexibility for amending, limited personal liability and credit protection.

With all forms of ownership transfer, there may be income, gift and estate tax implications. As part of the cottage planning process, there must be a complete analysis of the estate, gift, income and property taxes to prevent unintended tax consequences.

The type of entity and the specific aspect of the structure of any plan differs for each family. The point is there are different tools available to accommodate different family situations.


A plan for the cottage is a critical part of an estate plan that ensures the succession of a key asset to family members well after the original owner has passed on. Planning early gives peace of mind that the succession objectives will be met, and fosters communication among the family regarding their interest and intent. In addition to planning early, it is important to revisit the plan over time when a change in circumstance arises.

If you are interested in considering a cottage plan, you should contact a qualified estate planning attorney who has experience in incorporating cottage plans into clients’ overall estate plans.