CHOOSING CHILDREN
- Interest
- Geography
- Affordability
- Personalities
Various factors need to be considered when deciding which child or children should be chosen to carry on with the cottage.
One critical consideration is the level of interest of a particular child. If he or she is not enthusiastic about cottage ownership, with all the responsibilities and expenses that involves then including him or her in the cottage plans will only lead to friction and dissension.
Geography is relevant too. A child who lives far away may love the cottage, but if he or she is so distant it can seldom be used, then again problems will follow. A child who only uses the cottage a few days a year may feel unfairly treated if asked to pay the same portion of the costs as those who live nearby and enjoy the cottage frequently. Distant children will also not be in a position to contribute equally to maintenance and chores, which may be resented by the closer ones who then carry most of the load.
Cottagers know how expensive it can be to keep a cottage going. A child who is struggling financially may find it impossible to pay his or her fair share of the expenses. You may not be dong that child any favours by imposing the cottage burden upon him or her.
Don't overlook personalities either. If the kids always get along well together, wonderful. If they fight like cats and dogs, then perhaps leaving the cottage to more than one will be a formula for disaster, with a For Sale sign to follow.
COMPENSATION QUESTIONS
- Ignore or compensate?
- Apples and oranges
- Financial compensation
- By Will, from insurance or other assets
- By cottage owner children
- Life interest for excluded children
If not all children are chosen or willing to carry on with the cottage, should the others be compensated or ignored? A parent who wishes to provide some balance among the children may decide to leave the non-cottage owning child more of the other estate assets, or provide insurance to even things out.
If the estate assets are not sufficient to do this, then perhaps the cottage owning children should themselves contribute to the compensation, by leaving them the cottage on condition that the excluded child receives a certain sum from the new owners.
In addition to financial compensation, a child who is not included for whatever reasons in full cottage ownership may be provided a life interest. This would ensure that he or she is able to enjoy the cottage while alive, but would not be responsible for sharing the full costs, nor to leave an interest in the cottage to their heirs.
CO-OWNERSHIP CONCERNS
- Too many chiefs…
- Agreements avoid adversity
- Operation, sharing costs and tasks
- Restrictions on transfer
- Exit strategy
- Role of parents
- Involve the kids
- Learning curve
While the parents are alive and involved, they usually provide the leadership and guidance for the family. If there are competing wishes for usage periods or different ideas for improvements, the parents will normally make the final decision. Cottage life proceeds peacefully.
When the parents are no longer involved, then differences of opinion may escalate to disputes and result in deadlocks. If all kids are equal owners, then no one can outvote the other. A disgruntled child may decide to sell his or her interest to a third party to be rid of the problem, or even force the sale through court action. A Co-ownership Agreement negotiated and implemented while the parents are active can make all the difference between a short and unhappy period of sibling ownership, and a stable and continuing structure for future generations to enjoy the cottage.
FINANCIAL DIFFERENCES
- Impact on cottage ownership
- Agreement provisions
- Expenditure priorities
- Mandatory reserve
- Will solutions
- Testamentary trust
Not all children are the same, and not all children's pockets are equally deep. If the septic system packs it in, there's no choice but to repair or replace it, often at a cost of many thousands of dollars. One brother may be able to pay his share out of petty cash, while his sister may be too strapped to contribute. Does the well off one pay for both? Does the cottage go unused until the struggling one saves up enough money? Either will lead to dissension, resentment, guilt and hard feelings.
What if one child wants to build a bunkie to accommodate a growing family, while another can't afford the cost or doesn't want the view of the lake obstructed? Again, a Co-ownership Agreement can provide a structure to deal with these issues in a business-like way, preserving family harmony. A mandatory reserve built into the ongoing cottage budget can relieve the strain when an unexpected expense hits home. With their Wills, parents can also designate a certain portion of their estate be set aside specifically for cottage purposes, to provide a financial reserve to act as a safety net for financial stresses.