I’ve been told that making my child a joint cottage owner “with right of survivorship” is a strategy to avoid the probate fee upon my passing. Is this correct?—Lila Abdul, via email
We get why you’d want to avoid this fee (the administration tax that’s triggered when an estate owner has died, which is based on the value of their estate). And yes, making your child a joint owner “with right of survivorship” could potentially avoid the probate tax on the cottage. Upon your death, your child would become the owner.
But when there’s a gift of property,“the right of survivorship arising from joint ownership is not an absolute right,” says Peter Lillico, an estate planning lawyer with Lillico Bazuk Galloway Halka in Peterborough, Ont. “It will be based on the intention of the person making the gift.” This stipulation is because of a 2007 Supreme Court ruling in Pecore v. Pecore. That case was about money, but the ruling also applies to real estate. And it means that, after you die, if someone—another relative, say—were to dispute that you truly wanted your child to become the sole owner of the cottage, Junior might not automatically get it.
That said, “it’s really rather simple to avoid any issues about the right of survivorship,” says Lillico. “All the parent needs to do is put in writing, in his or her will, or on a piece of paper kept with the will (or by the joint-owner child), that the intention is for that child to inherit the cottage personally after the death of the parent,” he explains. “Easy peasy!”
Except…he wouldn’t recommend this as a cottage succession plan. “There are multiple potential problems with this approach,” he says. “Firstly, simply putting the cottage in joint ownership with the child can trigger capital gains tax for the parent.” (The cottage is changing ownership—it doesn’t matter that it’s only 50 per cent of it.) What if you sell the cottage? Junior would then be expected to pay half of the capital gains tax. What if you sell your home? Your child being a joint owner could affect whether or not the cottage qualifies for the full principal residence exemption. Avoiding the probate fee may not be worth risking the potential pitfalls.
Don’t worry, there are plenty of other strategies for owners who plan to hand down the cottage. To learn more, sign up for our free succession newsletter, Family Matters.
Got a question for Cottage Q&A? Send it to answers@cottagelife.com.
This article was originally published in the June/July 2025 issue of Cottage Life.
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