Family Cottage and Estate Planning


We have a family ”cottage” (house) where my brother has been living since we built a new house on the lot about ten years ago.

The property is still in the “estate of” my deceased grandfather, grandmother, and my mom.

She has not taken any steps since their deaths, she didn’t want to bother doing anything or paying any legal fees as there was no plan to sell it anytime soon.

She wants to address the situation now. She has willed it to myself and my brother evenly, but wants to know what she should/can do now to avoid/minimize tax costs and complications in the future.

She wants to let my brother continue living in it, but that once she is gone, she wants us to be able to sell it without hitting any unnecessary costs. She also may consider moving there in her later years.


The first issue to consider is the title to the property. It looks like that is in three names. The first step would be to move it over into your mother’s name. If this is the first dealing under Land Titles, that could save some time and expense. Was this registered in Joint Tenancy? There is a good chance that probate fees (now known as the Estate Administration Tax) will not apply.

There may be some taxes owing with respect to the estates of your late grandfather and late grandmother. They would have to be paid now, if they have not already been paid. This will relate to capital gains.

The construction of the building and the occupation of the property by your brother may help, if this was his only residence. If that is the case, then it may qualify as his principal residence and be exempt from tax. The starting point would be the time of occupation. I am assuming that your mother already has a principal residence and that her exemption is already in use.

Going forward, the property might later qualify as a principal residence for your mother. That would free up your brother’s interest.

There may be an opportunity to protect your interest by way of an equity participation mortgage. Basically, it’s a mortgage which entitles you to half the equity. It need not be registered.

By the time of ultimate transfer of the property at the time of your mother’s passing, your brother would be the registered owner, you would have an equity participation mortgage and this arrangement would avoid capital gains and probate fees.

There would be added risks if people don’t get along!

Brian Madigan LL.B., Broker

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