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You’re finally ready to sealâ€"theâ€"deal on the famâ€" ily cottage you‘ve dreamt about. Buying a cottage? Ownership structure matters When you die, unless you‘re passing assets to your spouse, you‘re deemed to have disposed of all your capital assets at fair market value. At this happy time, it‘s not easy to consider the time when your ‘new‘ cotâ€" tage will form part of your legacy â€" but you should. If your cottage has appreâ€" ciated in value, the resulting capital gains tax liability may force your heirs to sell the cottage. These are some of the ownership structure options you should consider to reduce the tax bite on your estate and your heirs: Transfer ownership now Principal residence Instead of leaving propâ€" exemption erty to your children You are able to make a _ through your will, you can principal residence capital _ choose to transfer some or gains tax exemption claim _ all of it to them during your on either your family‘s city _ lifetime â€" through the outâ€" home or your vacation _ right gift of the property property. with the option of retaining By Russ MCEACHNIE For The Chronicle If you choose to use your city home, the gain on your vacation property will be subject to tax. You can transfer ownerâ€" ship of your vacation propâ€" erty to a trust. Future appreâ€" ciation in the value of the property attributes to the trust capital beneficiaries, not to you. This option allows you to maintain control of the property now and name an independent third party to manage the property on behalf of the beneficiaries after your death. However, a trust may trigger an immeâ€" diate capital gain and capiâ€" tal gains on property held in trust will also be triggered every 21 years, so this option requires careful consideraâ€" tion. a life interest for yourself or by making one or more of your children joint owners. Either of these options may also trigger an immediate capital gain but future capiâ€" tal gains on the property will accrue to your children and are not payable until they sell or transfer the property. Buyâ€"sell agreement If one or more children wish to inherit the cottage but insufficient estate assets would remain (after the payâ€" ment of estate debts and taxes) to provide for a fair and equitable distribution to the other children, then a buyâ€"sell agreement between you and the children may be the solution. Here, a legal agreement could provide the children who wish to acquire the cotâ€" tage the right to purchase the cottage from your estate. Life insurance owned and paid for by those chilâ€" dren on your life could then be used to fund the purâ€" chase of the cottage and pay any resulting tax implicaâ€" tions of the estate. Your estate would then have the dollars needed for an equiâ€" table distribution to all your children. One good way to cover capital gains tax liabilâ€" ities and other estate debts is with permanent life insurâ€" ance. The death benefit is taxâ€"free and can provide a ready source of cash that could prevent the forced sale of assets â€" including your cottage â€" to pay taxes. It‘s a good idea to discuss your cottage ownership and succession options with your tax, legal and financial advisors to ensure the choicâ€" es you make coâ€"ordinate with all the other aspects of your financial and estate plan. This column, written and published by Investors Group Financial Services Inc., presâ€" ents general information only and is not a solicitation to buy or sell any investâ€" ments. Contact a financial advisor for specific advice about your circumstances. For more information on this topic please contact Russ McEachnie at 519â€"886â€"2360 ext. 241 or email him at Rusâ€" sell.mceachnie@investarsâ€" group.com. Your Mother Called! She would like (needs): A Tree Shrub or maybe a flowering basket Or two. PS: Mother‘s Day is coming Hours: Monâ€"Fri 8:30amâ€"$pm, Sat $amâ€"Spm, Sun 1 Iamâ€"4pm WATERLOO CHRONICLE + Wednesday, May 9, 2007 * 27 Group 1661 New Jerusalem Rd. (519) 664â€"0404 Retirement & Tax Specialist Russ McEachnie