A cottage trust is created for a second home to preserve the home beyond the owner’s death to the benefit of the heirs for lifetime use. Usually parents transfer ownership of a cottage to trust to hold the cottage for the parent’s children, grandchildren or other beneficiaries. The trust may define when the home is to be used, who is may be used by, and who is responsible to pay the costs arising from the home. In creating a cottage trust, it is key to make sure that there are sufficient funds in the trust, to create a “cottage maintenance fund” in order to reduce the financial burden on the children of maintaining the cottage for the duration of the trust.
