Are you aware that keeping the cottage in the family may result in a capital gains tax liability?

by Michael Bronstine

The Keep the Cottage in the Family strategy provides you the opportunity to redistribute some of your taxable investments, particularly your bond or GIC portfolios, into a participating whole life insurance policy to enjoy tax-deferred savings and a tax-free death benefit that can be used to preserve and enhance your estate by covering the capital gains taxes owing on the family cottage when you pass away.

Benefits of this strategy

• Tax-free death benefit to fund capital gains tax liability from a vacation property
• Build a large, immediate estate value
• Reduced time and costs for estate settlement (with a named beneficiary)
• Maintenance free management for owner and people who may need to step in if owner is incapacitated
• Tax-deferred growth within the policy
• Possible creditor protection
• Access to the policy cash value

When should you consider the Keep the Cottage in the Family strategy?

• You own a second property or cottage
• You have investments that are taxable
• You are in a high tax bracket
• You want to preserve your estate from taxes
• You are looking to equalize an inheritance between children
• You are looking for a stable maintenance free investment option with tax-deferred growth