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Legacy Matters
BlogsPublications | June 6, 2023
4 minute read
Legacy Matters

Shared Ownership of Family Cottages, Part One: Does It Make Sense to Pass the Cottage to Future Generations?

As the family gathers at the summer cottage or vacation property each season, the senior generation might think how nice it would be for these multi-generational gatherings to continue after they pass from the scene. And to be proactive, the senior generation might ask their estate planning attorney to help them design a plan for the continued use and enjoyment of this property by future generations.

I recently spoke on planning for family cottages and vacation residences at the 63rd Annual Probate & Estate Planning Institute on May 18, and I discussed how this planning often turns out to be more complex than it first appears. My presentation focused on two important questions a family must consider in determining the future of the family cottage or vacation property. First, does it make sense to transition ownership of the cottage to the next generation? And second, if it does makes sense, how should the next generation hold and manage that ownership?

In this post, I provide some thoughts on the process involved in answering the first question.

Understand Your Goals for the Property

Begin by asking yourself some questions about why you want the property to stay in the family:

  • Are you trying to keep the family from drifting apart?
  • Is it most important to you that the cottage remain available to all family members or that it remains in the hands of at least one family member?
  • Is it more important to foster continued ownership of the cottage in the family or that individual members will be able to withdraw from ownership if needed/desired?

Understand Your Children and Their Goals

Sometimes parents assume that because everyone enjoys their time together at the property now, their children or grandchildren will be interested in shared ownership of the property in the future. It is important to have honest conversations with the next generation to answer some key questions. The answers to these questions will help you determine if it is realistic for your descendants to share ownership and use of the cottage.

  • Do they live close enough to use the property or do they live too far away to use the cottage often enough to own it?
  • Will they have the financial resources to contribute to the ownership and upkeep of the property?
  • How emotionally attached are they to the property?
  • Are they too busy with their careers, children and grandchildren to use and maintain a vacation home?
  • How well do the children, spouses and grandchildren get along?
  • Do they have a history of cooperation with each other?
  • How have they handled conflict with other family members in the past?
  • Would joint ownership create friction and drive wedges between them?
  • Would they rather have their own cottage and not deal with the complexity of shared ownership?

Understand the Financial Aspects of Next Generation Ownership of the Property

If it seems like none of the issues above will be a barrier to shared ownership of the property in the future, you are ready to consider the financial issues involved in transferring the property.

  • What are the current annual expenses for the property?
  • How will these be paid under joint ownership?
  • Do you have estate assets that can fund ongoing operational expenses for the property?
  • Do you have sufficient assets in your estate to pay any estate taxes attributable to the property? A taxable estate with liquidity issues due to the presence of a valuable property and other illiquid assets can force the sale of the property to pay taxes.
  • What are the property tax implications if an “uncapping” event occurs? If the taxable value and the state equalized value are far apart, a “transfer” for property tax purposes (i.e., an uncapping event) can dramatically increase property taxes and create a serious challenge to overcome.

Keeping the Property in the Family

Assuming the next generation wants to own the family cottage or property, and it makes sense for them to do so, consider if you want to transfer ownership during your lifetime. This could provide an excellent opportunity to see how your children will be involved in and handle management issues and perhaps give you an opportunity to guide them as they learn.

In part two of this post, I will discuss the considerations when choosing among an entity, trust or co-ownership agreement for sharing ownership of a property as a family.

If you are considering transferring a family cottage or vacation property to the next generation, Warner can help with the process. Contact your estate planning attorney or contact Mark Harder at or 616.396.3225.