Threat # 3 The inability of the heirs to collectively afford to keep the family cottage.
This the third and final blog in a series highlighting common threats to the future shared ownership among heirs of the family cottage. The first threat was heir’s failure to pay their share of expenses and the second threat was disagreements among the heirs concerning the repairs, improvements and maintenance of the cottage.
In literally all of my initial discussions with cottage planning clients I always ask two basic questions. First, do your children even want to continue ownership of the cottage and if so, the second question is can or will they be able to afford it?
Sometimes, parents can foresee potential problems with the affordability of the cottage by the heirs and take action in their planning to address this threat. Usually this planning involves establishing an endowment fund for the cottage to be collectively managed by all the co-owner heirs with specific provisions as to when and how the funds are to be used to pay cottage expenses.
The endowments may be established using a portion of the parents other assets at their death or designating life insurance death benefits be paid to establish a cottage endowment.
The point of this blog series as far as “threats” to the family cottage and my similar previous blog series identifying “real estate law surprises” the point is that all of the surprises and threats can be effectively managed by careful planning.
Unfortunately, all too often, parents ‘intend toi plan for the future family ownership of the family cottage but it never happens. Don’t let that be you!
Call or email me today to discuss your family cottage!
dan@penninggroup.com
