What Happens to the Family Cottage After My Parents are Gone?

Cottage lake with diving platform and docksMillennial Parents Guide To Financial Planning For Children

My family loves going to the cottage every summer. My siblings and I grew up jumping off the dock, fishing with my dad, and celebrating our lives together by the lake.

Of course, we were never comfortable asking our parents what happens to the family cottage when they’re no longer around. My parents have always said they’ll leave the cottage to all of the kids. At first, I was happy I’d still have a piece of this beautiful property to hold onto. Then I started to think about what this would mean, and became upset.

It’s a morbid subject; one none of us like to think about, let alone discuss out loud.

But I also know it’s an important conversation to have. And I’m not just saying this because my family advisor recommends we discuss it. I’ve watched the aftermath of what happens when families avoid this topic with my own two eyes. It’s best to address it now, before it’s too late to avoid.

Both my parents and my in-laws have had to deal with financial battles with their sisters and brothers after the loss of their parents. Beyond the bigger arguments over the family home, family businesses, real estate holdings and investments – most of us had to stand by and see the family tear itself apart while the lawyers went sailing on their new sailboats with our family’s money.

Our family cottage is sacred to us. It’s holds so many special memories. It’s not going to be easy, but I want us to find a strategy that would prevent it from turning into a subject of deep pain and resentment. And yet, this is exactly what will happen if we don’t talk about it now, while our parents are alive and we’re all still talking to each other.

Millennials are the children of baby boomers; the most affluent generation in human history.

Our parents’ generation was known for being collectors. They collected more stuff than any other generation. Before the 1950s, estates and wealth were generally acquired by the descendants of wealthy people. Now, it’s not uncommon for the middle class boomers to own cottages, investment accounts, businesses, investment properties along with the million dollar home which they bought for about $100,000 in the 1980s.

The millennial generation is now called “mass affluent” because over the next 20 years we’re going to inherit almost $4-trillion of assets and stuff. In all of human history, no one has ever passed on this much wealth to the next generation. As a society, we don’t have a history or system to help us understand the best approach to doing so.

But I can’t help but wonder: are we losing sight of what really matters?

I’m fortunate in that my husband and I have two family cottages to enjoy. My in-laws own a property in the Muskokas. We spend a lot of time up there as a family. My husband has two brothers, and already we’ve had to get creative in developing schedules for who’s staying where, and when.

The other cottage is on Lake Huron, and co-owned by my father, stepmom and aunt and uncle. We’re a blended family, which makes matters even more complicated when it’s that time. There are six adult children, plus significant others, who have family ties to the property.

If I know our parents, I know they want to be equitable. What they may not be thinking about is that equitable also means drama.

So, what happens to the cottage after they’re gone?

I know this is just the beginning of the conversation. And maybe my parents have already determined whom they’re leaving with what in their will.

I can’t help but wonder: what happens if it’s not me?

I also know the reality is much more complicated than what a sealed document can predict. I haven’t even touched on capital gains tax, probate taxes, or out of town siblings. I have many other questions around buying another sibling’s share, how will it be financed, or what happens if they don’t want to sell their share to us.

For now, I need to know what we’re facing so we can have that conversation as a family and deal with it while our parents are around. How can we ensure we learn from the experiences of our relatives? Is there a way to create a plan that provides for all the family equally now, while still making the smartest choices for my family’s finances?

Michael Lampel, President and Founder of Insurance for Children, responds to this millenial’s question. YEs, You Can Keep the Family Cottage in the Family

Sample illustration of Child Plan™ Cash and Insurance Values

Based on a Monthly Deposit of $250 per month

Age Accumulated Cash Value Life Insurance Value
20 $82,568 (Education) $612,728
35 $177,953 (House) $1,115,297
45 $303,299 (Security) $1,115,297
65 $834,276 (Retirement) $1,666,824

Sample illustration is based on a monthly contribution of $8.32 a day/$250 a month for twenty years, starting when the child is less than 1 years old. Cash and life insurance values are based on the current dividend interest rate of 6% from a Canadian life insurance company. This example is strictly for illustrative purposes only, the annual dividend scale is not guaranteed and values may differ.

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*illustrations are reflective of the annual premium amount

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