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What Can a Cottage Plan Do for Me?
As discussed in our last blog, Avoiding an Uncapping of Property Taxes: Klooster v. City of Charlevoix, joint ownership provides an interesting planning tool for property tax issues, however, it is not a silver bullet for cottage owners. Joint ownership does not address the concerns regarding the future management of the cottage, which many times will outweigh any tax concerns cottage owners have. A complete cottage plan should not only address issues related to taxes, but also issues related to the future management of the cottage.
Typically, the entity which owns a cottage, whether a trust or a limited liability company ("LLC"), is structured to do several things. Its primary function will be to create an effective and efficient structure to provide for simple management of the cottage, to ensure the cottage is maintained appropriately and, most importantly, to ensure that all family members who have interests in the cottage can use and enjoy the cottage in a way that does not interfere with the interests or enjoyment of the other members.
The Operating Agreement for an LLC (or the trust document) can cover a host of issues, such as: management, maintenance, scheduling and use, transferability, pets, and sharing of expenses. After meeting with many cottage owners, and having personal experience with family cottages, one thing we know for sure is that effective management is crucial to the success of a jointly owned cottage.
Cottage planning is complicated. There are hosts of issues to consider, and many important issues might point in different planning directions. Unfortunately, the path of least resistance – doing nothing – is too often the result. However, the benefits that a cottage owner can provide to the succeeding generations of his or her family through a carefully thought out plan are beyond measure. The family cottage is a place to relax, a place for enjoyment, and a place for togetherness. It is also a place to protect and preserve. Planning now will enable the family to enjoy the cottage for years into the future. We are here to help you accomplish your goals so your family retreat is preserved for generations to come.