Eve and Jason bought a cottage more than 20 years ago and have spent many happy summers
at this lakeside retreat with their three children. They’d always intended to pass the cottage to
the kids and already had an insurance policy in place to cover the capital gains tax that would
be triggered by the disposition of this valuable asset.

The couple thought they had a good plan for the family cottage. But with the federal government
now proposing a higher capital gains inclusion rate that would tax 66.67 per cent of capital gains
over $250,000 for individuals – up from the current inclusion rate of 50 per cent – Eve and
Jason worried their existing insurance would no longer be adequate.

As much as they wished to keep the cottage in the family, the last thing Eve and Jason wanted
was for their children to be left with a hefty tax bill. Here’s how Rubach Wealth helped them:


  • Discovery, first and foremost. All good solutions start with a clear and thorough
    understanding of the problem. We looked at Eve and Jason’s existing insurance policy
    and calculated how much more they would need if the proposed increase to the capital
    gains inclusion rate got approved. Once we accounted for this possible change, we
    projected a capital gain of $750,000 on the family cottage. That gave us a concrete
    starting point on which to build a solution.


  • Accounting for a third property. Through our initial conversation, we also learned that
    in addition to their primary residence and cottage, Eve and Jason had a two-bedroom
    condo which they had purchased recently. This third property, located in the same city
    where their youngest son would soon be going to university, was meant to provide
    housing for their son while bringing in rental income.


  • A joint insurance policy. To ensure there would be enough money to cover capital gains tax not only on the cottage but also on the condo, Rubach Wealth helped Eve and Jason secure a new, jointly owned whole life insurance policy that would pay out after the death of the last surviving owner. The projected value of this new policy aligned with our capital gains tax projection for the two properties.


  • A complete financial plan. Eve and Jason had a financial plan but it hadn’t been
    updated in years. Rubach Wealth sat down with them to create a new comprehensive financial plan as well as an estate plan that included an updated will. As part of this process, we worked a tax planning partner.


More work ahead

When Eve and Jason first approached Rubach Wealth, they expressed concern over how their
children would handle shared ownership of the cottage once their parents passed way and they
had their own families. Rubach Wealth will soon be talking to the entire family about the
financial responsibilities associated with joint cottage ownership, and ways to maintain harmony,
including drafting a cottage code of conduct document.

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