Financial Planner Fabio Ventolini Speaks on Cottage Succession Planning and How It Could Save Your Family From Debt

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Fabio Ventolini, estate-planning specialist, shares his input on the importance of cottage succession planning

Sometimes spouses do not get along, one child lives really far from the cottage and never uses it or one child wants to sell the cottage. Regardless of the issue, cottage succession planning is essential to avoid any unforeseen complications.

As the snow is melting and temperatures are rising, Canadian families cannot help but get excited for cottage season! Whether it’s going on nature walks, canoeing with the kids, or making s’mores over the campfire, the cottage is the heart of many fond family memories. And as these old memories are re-lived year after year, new ones are made and passed down to generation after generation.

Although the family cottage holds deep emotional resonance, what many families may not know is that it is also a very serious tax and estate planning liability. There will come a time where you will need to change the ownership of the cottage, and hopefully pass it down to the next generation of your family to create new memories. However, without thoughtful planning, this process could cost you or your heirs a lot of cash, or even worse, may result in having to sell the cottage that has been in your family for generations. By planning in advance with a tax specialist, you may be able to mitigate some of these potential issues. Fabio Ventolini, trusted specialist in tax, retirement, and estate planning for executives, business owners and affluent families, speaks on successful cottage succession planning.

Q: Why is cottage succession planning so important?
Fabio: There are two main reasons why cottage succession planning is essential: property value and taxation. The market value of your property in sure to have skyrocketed in the last 20 to 30 years, or even more so depending on its location. This makes it very difficult for younger families to justify owning such an expensive asset, as ownership will involve having to pay property taxes, maintenance, repairs, mortgage payments or loss of income from trapped equity. These items add up, and could otherwise be used to cover other day to day expenses involved with starting a family. The second, much bigger issue is the taxation that occurs when the property changes hands. Once ownership of any taxable asset changes, tax is due. When it comes to a cottage, any taxable gain in the value of the property is taxable when the change in ownership occurs. If you or your cottage successor has not budgeted in advance for this taxation, this could result in you or them having to sell the property just to pay the tax bill.
Also, although we would like to think that our children will enjoy the cottage without any problems for years to come, unfortunately I have seen many issues arise. Sometimes, spouses do not get along, one child lives really far from the cottage and never uses it, the child who lives close is forced to do and pay for the maintenance, one child really needs some money and wants to sell the cottage, or another may want to rent the cottage out for parts of the year. Regardless of the issue, cottage succession planning is essential to avoid any unforeseen complications.

Q: How can families avoid paying capital gains tax on their cottage?
Fabio: Capital gains taxes cannot be completely avoided, but there is a wide variety of options you can consider to reduce these taxes. One way to reduce your capital gains tax is by maximizing the adjusted cost base, which involves adding any additions and improvements of your property, such as extensions and renovations to the acquisition price. If the family is transferring the cottage at death, they can leave the cottage outright, create a testamentary trust or look into their life insurance coverage to help pay the taxes. These are just some ways to reduce your capital gains tax, but it is entirely dependant on your individual situation.

Q: How can families know which cottage bequeathing option is best for them?
Fabio: As every family’s situation is unique and the family cottage can be quite tricky, it is essential that all families seek professional advice before they become riddled with tax debt. As a trusted specialist in tax and estate planning for 21 years, I can help you find the perfect solution for both your tax liabilities and your family dynamic.

About Fabio Ventolini: Fabio Ventolini is a trusted specialist in tax, retirement and estate planning for executives, business owners and affluent families. For more than 21 years, he has worked closely with clients to generate tailored financial planning and financial services. He recently joined Bellwether Family Wealth, a division of Bellwether Investment Management Inc. as the Vice President and Family Wealth Advisor. Through this role, he guides the management of corporate investments and protects their assets from creditors and liabilities. He also takes on financial planning roles for affluent individuals and families.

Fabio Ventolini can be contacted at

This article was written by My An Tran, Senior Copywriter at Mrkt360.

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