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My Father left (in 1974) a cabin in N. Ontario to my Brother

and I (undivided half interests)...
My Father left (in 1974) a cabin in N. Ontario to my Brother and I (undivided half interests). My brother and I are in our 60's and wish a smooth and ultimately (short and longterm) uncontentious transition of ownership to our children. We appreciate the probable geometric increase in descendants and can only guess at the ongoing interest in vacationing at the cabin. I live in the US where a LLC might well meet our needs but I am advised that that option does not exist in Canada. What is the best Canadian option given we don't anticipate an early sale of the property?
Thank you for responding to this question.
XXXXX XXXXX
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Answered in 6 minutes by:
9/1/2013
Debra
Debra, Lawyer
Category: Canada Law
Satisfied Customers: 102,591
Experience: Lawyer
Verified
Thank you for your question.

Before I begin I want to explain a bit about how the site works.

It may be that I will find that I need to gather further information from you. As well, it's quite possible that you may feel the need to ask me additional questions for further clarification.Please do not worry that you will be charged additionally if I ask you questions or if you need to ask me questions. That is not at all how the site works.

As well, please understand that as a careful lawyer I will always give you an honest answer even if the answer is sometimes not what you were hoping for.

Finally, as we go through the process please do not feel rushed if I ask you a question. You are always free to take your time to gather more information before you post back. As well, please understand that even after you rate me the post will not lock and you could always come back for further clarification if you think of something a bit later on down the road.

What you can do is add all your children to the title as joint tenants. So when you die title will vest in the children, and there will not have to be any probate fees on the title.

There will be capital gains tax to pay. That will have to be paid, in part, when the children are added to the title and then again on your death.

There is simply no way around paying capital gains tax regardless of what you might have heard.

Let me know if you need any further clarification.
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Customer reply replied 4 years ago

Thank you. I would like an option that allows my brother's half interest and mine to be passed on to our respective children allowing each family subset 50% of the time and cost sharing in the cabin. Does such an option exist under joint tenancy? If not, what is a better choice?


Dennis

It seems like what you need is for your children to inherit your half, your brother's to inherit his half and that the two part of the interest would be held as tenants-in-common.

So each family is equal in terms of their group no matter how many kids you each have but there are two separate by equal units.

The presumption then would be that each separate family unit would share equally in costs and in time spent at the cabin.

You could have title taken in a way that makes it clear that each half is clearly 50%.

You can also have a contract drawn up that all the kids sign that would bind them and this can be done before their names go onto the title.

You will need a lawyer to assist.


You can contact the Law Society and use their Lawyer Referral Service. You will be given the name of a lawyer and can consult with the lawyer and the first half hour will be free.

The number is:

1-800-268-8326 or(NNN) NNN-NNNN(within the GTA)
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Customer reply replied 4 years ago

Thank you. Is there a specific option that avoids the risk of Partition demands in the future?

Customer reply replied 4 years ago
Relist: Other.
No answer to last question. Have waited 30 minutes.
My question related to an option that avoided risk downside of Partition demands.
Sorry for the delay. I never received a notice that you replied again.

There is no real way to avoid this down the road though the tighter the contract the better.

But ultimately it's rarely the case that a Court will not order a partition and sale if some owner wants out.
Debra
Debra, Lawyer
Category: Canada Law
Satisfied Customers: 102,591
Experience: Lawyer
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Debra and 87 other Canada Law Specialists are ready to help you
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Customer reply replied 4 years ago

Debra


Thanks for following up. My goal, if the option exists in Canadian law, is a succession of the cabin, divided equally between my children and my brother's children, that avoids the possibility of partition. An LLC in the US allows structuring succession to avoid partition. Does a similar legal vehicle exist in Canada? Joint tenancy does not avoid the possibility of partition.Are there management systems or operating agreements that prevent one unhappy member from forcing sale of the property?

You can set up something like a family trust.

But that becomes expensive and cumbersome for tax purposes.

You would need an experienced estate/corporate lawyer to help with this.
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Customer reply replied 4 years ago

Debra


Is a family trust my only option? If not, what other vehicles exist? What would be your choice if you where in my position given the parameters I have outlined?


Last question and thanks for running this down from a week ago.


XXXXX XXXXX

There can be a corporation that can own the property as well.

But that can be complicated if there are not any Ontario residents to be directors.

It's all very complicated because of capital gains tax, and there being non-resident owners, etc

So I honestly don't know what is the best, XXXXX XXXXX without your consulting with a chartered accountant as there can be a lot of ongoing costs and tax issues if there is a trust or corporation which owns the property and there are non-residents etc.

I don't feel that I can really guide you as the site really just allows me to provide the information but as well, this is complicated by costs, and your wishes which may be a priority for you and so you really need actual legal and tax advice rather than just information.
Debra
Debra, Lawyer
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Debra
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