Cottage Planning Solutions

A Limited Liability Company-based Cottage Succession Plan or Cottage Trust provides maximum protection for:

• you

• your family

• the family cottage

Indirect ownership by a separate entity prevents any co-owner from forcing the sale of the family cottage by filing a partition lawsuit. The structure or entity holding the legal title and “direct ownership” of the cottage will have governing terms addressing the future ownership, management, financial arrangements and use of the cottage that could not otherwise be imposed on an individual as a direct co-owner.

Real Estate Ownership

There are two ways to hold title to real estate:

• directly, or

• indirectly

Direct Ownership

Real Estate Law governs the rights and duties of "direct owners". The granting of these rights and how real estate laws impose duties on direct owners often surprise cottage owners. It's these surprises which put the family cottage at risk. Real estate laws of direct ownership do not promote keeping the cottage in the family for multiple generations, and the threat of partition and turmoil always exist.

Indirect Ownership

Entity Law, which are Laws of Trusts, Partnerships, Corporations, and Limited Liability Companies, govern the rights and duties of "indirect owners". Entity Law is extremely flexible and accommodates the complex realities of commerce.

A Cottage Succession Plan relies on indirect ownership and addresses inherent cottage sharing problems and allows you to manage your cottage like a business.  The entity holding legal title  LLC or Cottage Trust will determine everything about your cottage.

The entity holding legal title and it’s governing terms will change the way your family owns an interest in the family cottage. Instead of a "direct ownership" in the cottage property real estate, each family member becomes an "indirect owner" of the real estate through an LLC or acquires a beneficial interest in the real estate through a Cottage Trust..

You Create the Rules

When you transfer your family cottage property to a legal entity (LLC) it means Entity Law, and not Real Estate Law, will govern the relationship of owners. Indirect ownership of your cottage through an LLC allows cottage owners to use laws intended for a business entity. You are able to customize an arrangement specifically for your family's wishes.

You are in control.

You get to decide how the family cottage will be operated, financed, and most importantly, you are in control of how the cottage will pass from one generation to another.

7 Key Common Cottage-Related Concerns

Within our planning process, we have identified 7 key areas of cottage-related concerns which are addressed and resolved within a successful Cottage Succession Plan. These concerns include:

• The possibility that ownership of a part of the cottage will pass into the hands of a non-family member as a consequence of death or a divorce.

• What to do if a family member is not able or not willing to meet any or all financial commitments to the cottage.

• The financial impact on the cottage if a family owner files bankruptcy, or a portion of the cottage's interest is levied by a creditor of a family member.

• How to solve internal conflicts between family members about how the cottage is operated, maintained and improved.

• A family member wants to "cash out" their interest in the family cottage.

• Disharmony and even possible litigation between siblings when parents are no longer around to mediate a peaceful resolution.

• What happens when a child, or children cannot afford to keep the cottage.

Send me a message or give me a call to discuss your family’s options.